ISSN - Amazon Web Servicesimm-gsm.s3.amazonaws.com/magazine/aug-sep-2014/SM August-September...

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JOURNAL OF August–September 2014 • R46 (incl. vat) OFFICIAL PUBLICATION OF THE Coherent. Credible. Courageous. Nicola Kleyn: The dark side of customer co-creation Tebogo Ditshego: Communication strategies of the future Trends: The frozen yoghurt phenomenon hits SA 9 772222 619001 11016 TRANSMEDIA STORYTELLING BRANDED CONTENT BRAND JOURNALISM Content marketing Using valuable content to attract and engage customers TRANSMEDIA STORYTELLING BRANDED CONTENT BRAND JOURNALISM Convenience retailing The rise of the service station forecourt Tales from the mall Who mall shoppers are and what they really want

Transcript of ISSN - Amazon Web Servicesimm-gsm.s3.amazonaws.com/magazine/aug-sep-2014/SM August-September...

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J O U R N A L O F

August–September 2014 • R46 (incl. vat)

OFFICIAL PUBLICATION

OF THECoherent. Credible. Courageous.

• Nicola Kleyn: The dark side of customer co-creation • Tebogo Ditshego: Communication strategies of the future

• Trends: The frozen yoghurt phenomenon hits SA

ISSN

9 772222 619001

11016

TRANSMEDIA STORYTELLING

BRANDED CONTENT

BRAND JOURNALISM

Content marketingUsing valuable content to

attract and engage customers

TRANSMEDIA STORYTELLING

BRANDED CONTENT

BRAND JOURNALISM

Convenience retailingThe rise of the service station forecourt

Tales from the mall

Who mall shoppers

are and what they

really want

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IN ASSOCIATION WITH

Brought to you by the IMM Institute of Marketing Management and Mikateko Media, Strategic Marketing reflects an unbiased perspective of local and international marketing trends and opinion without compromise, courageously and coherently.

PublISHINgPublisher Desireé Johnsonbrand Director Bulelwa Mtsali

EDITOrIAlEditor Mike [email protected]@mikesimpsonmedia.co.zaArt directors Rashied Rahbeeni & Pascale d’OffayProofreader Tracy GreenwoodProject coordinator Sive Booi

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Mikateko Media, New Media House, 19 Bree Street, Cape Town 8001 Postal address: PO Box 872, Green Point 8051 Tel: 021 417 1111www.mikatekomedia.co.za

A lthough there is well-documented concern around a lack of consumer confidence in South Africa, the

retail sector continues to be a robust and innovative space, with new players entering the market and many examples of refreshing new thinking coming to the fore. It’s no surprise, then, that several articles in this issue touch on the retail industry.

Our story on the strong growth of the frozen yoghurt market also makes for intriguing reading. Virtually unknown in this country a few years ago, it has now seemingly moved beyond being a fad to become more mainstream as a business model – attracting credible investors, experienced franchisees and a number of new players into the market. Interestingly, from a marketing perspective, all seem to follow a similar ‘bright, colourful and fun’ brand strategy – begging the question as to whether there is sufficient brand differentiation and if we’ll see a market shakeout at some point?

Sticking with consumer-facing businesses, I found the research article on mall shoppers fascinating. Let’s be honest, “going to the mall” has become an institution in this country – whether it’s to shop for groceries, grab a burger, see a movie, hang out with friends, or simply ‘be seen’. So for marketers to have access to independent research on what makes our mall-going population tick should be valuable indeed.

Content marketingThe concept of content marketing has been with us for a long time and was once most frequently seen in the form of newsletters from companies and other bodies wishing to give their clients, and the marketplace in general, something a bit more ‘meaty’ and usable than organisational propaganda and fawning meet-the-MD profiles. These days, the growth of new communication mediums and the expense of traditional advertising has seen the proliferation of content marketing initiatives,

FROM THE EDITOR

South Africa’s retail sector continues to innovate

The IMM Graduate School of Marketing (IMM GSM) is registered with the Department of Higher Education and Training (DHET) as a private higher education institution under the Higher Education Act, 1997. Registration certificate number 2000/HE07/013.

NATIONAL CALL CENTRE 0861 IMM GSM | 011 628 2000www.immgsm.ac.za

IMM GSM Ad - SM March.indd 1 2014/03/17 1:43 PM

ranging from glossy magazines produced by supermarket chains, to newsy websites from medical aids and online newsletters by professional service companies.

The difficulty now, though, is that everyone’s doing it and getting seen amidst the clutter is becoming increasingly difficult. How to ensure your content marketing initiatives are noticed – and absorbed – by the right people is a key theme in both our content marketing articles in this issue.

Striving for excellenceOf course, Strategic Marketing, whether you’re reading us in print or online, is itself a content marketing strategy by the Institute of Marketing Management (IMM). And although our readers will be the final judges of our excellence and value, we would like to think we’re enhancing the brand by producing a high-quality publication that provides impartial thought-leadership in the marketing sphere. In this issue alone, our contributors include no less than three marketing professors, one senior marketing lecturer and one CEO – plus several other high-level expert contributors and journalists.

It’s also worth mentioning that, unlike many other publications, we strive for the highest standards of editorial integrity. We don’t disguise cheap PR as credible articles; we don’t give editorial in exchange for advertising support. Our concern is for you, the reader and marketer.

Happy marketing!

Mike Simpson

Getting your content marketing

noticed is the challenge

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August–September 2014

Contents26 theFEATUREs

26 RETAIL: NEW MARKETSFrozen yoghurt is a phenomenon that took America by storm, moved on to Europe and has now hit our shores – with great success

30 REPUTATION MANAGEMENTDespite a few issues of its own in recent times, one of South Africa’s most upmarket retailers has the best reputation in the country

33 ON THE UPFarewell babes, balloons and hot air? Up-and-coming PR man Tebogo Ditshego has firm ideas about the future of the industry

36 MEDIA STRATEGY: OPINIONRichard Lord laments the lack of understanding that media planners and marketers have for digital and its place in the wider media mix

40 HOT OFF THE PRESSThe trend towards greater levels of product co-creation is generating new customer service challenges and opportunities

42 CULTURE AND MARKETINGWhile the opportunities in Africa for SA companies are acknowledged, the practicalities of gaining a competitive advantage are still being debated

46 PRICING STRATEGYStrategies based on price promotion can be a double-edged sword, as new research from Columbia Business School in New York shows

COVERFeAtUReS8 CONTENT MARKETING:

OVERVIEWThe growth of the Internet and social media has created a flood of material that is challenging the success of brand-driven content

12 CONTENT MARKETING: SOCIAL MEDIABuilding true social media engagement means creating a content strategy to hook the audience, not simply ‘having a presence’

16 RETAIL: SHOPPING MALLSUntil now, relatively little independent research has been done to understand the millions of people who shop in our many malls

20 RETAIL: CONVENIENCESA’s major retailers and big fuel brands are joining forces to create a high quality new retail channel with 24/7 convenience

48 GLOBAL VILLAGEWhile India poses many marketing challenges, the enormity of the numbers make it a market not to be ignored

52 GLOBAL CONSUMERISMEven though the global recession has ended, the more frugal buying patterns learnt by consumers during that period have remained

theREgUlARs4 IN MY OPINION

They call it progress. Why we shouldn’t mourn the passing of Greasy George and the ‘corner café brigade’ of a bygone era

6 IN SHORTYouth brands, valuable brands and the art of good customer service. Interesting snippets of news from the wide world of marketing

32 SAFFER IN AMERICASouth African academic Michael Goldman, now based in San Francisco, gives a marketing perspective from the US

56 WEIRD WORLD OF MARKETINGMarketing history is full of strange brand collaborations, with one of the more uncommon being the luxury fashion brand and the ice cream manufacturer

Next issue: Big data and marketing What’s up with private labels? Adding value via brand differentiation

DISCLAIMER“As supplier of the goods/services, you, the Advertiser warrant that you are familiar with and will comply with the provisions of the Consumer Protection Act, Act 68 of 2008 (‘CPA’) in all transactions between us. Among other, the CPA provides for some consumer rights regarding delivery, returns, disclosure of information and product quality and safety. You accordingly indemnify Mikateko against any damages that we or any other party may suffer as a result of your noncompliance with the CPA or as a result of any damages suffered by any party due to defective or unsafe goods/services supplied by you.”

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strategicmarketing August–September 2014

inmyopinionMike SiMpSon is the Editor of Strategic Marketing. He has 30 years’ experience in the global media industry and has worked in the print and electronic sectors, as well as in public relations and marketing.

“Close up shop Mr Nico, that’s what the big man said. Make way for concrete and steel … and no one even cared.” Lyrics from the 1969 hit song Mr Nico by SA pop group Four Jacks and a Jill. By Mike Simpson

Why we shouldn’t mourn the passing

of Greasy George

THE yEars and THE conTExT were different, but the poignant song from yesteryear about the

(presumably ethnic Greek) shopkeeper who is forced to close his shop to “make way for concrete and steel” still resonates today in south africa’s fast-changing retail environment.

as our article in this issue points out (see pg 20-24), fuel station forecourts are becoming the new convenience stores. For my generation, and many who grew up here in the 1960s-80s, the forecourt retailers are the new ‘corner café’ of our era.

our local was run by a slightly seedy character known as ‘Greasy George’ who happily sold stale sweets, single cigarettes for those who couldn’t afford them by the pack, and cholesterol-laden russians and chips (… oil guaranteed to have been changed at least once a year …) to the hungry, but obviously undiscerning, passing trade.

Through the rose-tinted lenses of my childhood memories, Greasy George’s was a fun place to be for a little boy. He had a gun on his hip, a baton under the counter and a permanent hand-

rolled cigarette in his mouth. customers who displeased him were told to “**** outa my shop” and chappies bubble gum was given in lieu of small change, which he seemingly never had. But at least he allowed us kids to read the comics in-store without paying – albeit with dire warnings of the consequences of damaging or stealing them.

poor hygiene and customer service as an adult, however, I would have been appalled by the poor hygiene, aggressive ‘customer service’, lack of product variety and the generally below-par condition of the stock. I don’t know what became of Greasy George’s, but if it hasn’t gone the way of Mr nico’s shop in the song, it should have.

informed insight infront

The world has moved on, consumerism and customer expectations have moved up, and the reality is that only those (few) corner shops that can compete with the likes of the new 24/7 forecourt retailers will survive. Lamenting the passing of a café on every corner is like wishing for a return to the world of 25-40 years ago.

as we witness the arrival of the first upmarket malls and high-quality shopping centres in the townships and other previously disadvantaged areas, we are surely also seeing the beginning of the slow decline of the spaza shop. It won’t be immediate and it probably won’t be rapid, but we’ll eventually see only those spaza shops thar fulfil niche needs, or provide excellent customer service, survive.

don’t mourn for them and the corner café any more than you would for a Model T Ford available only in black. as in nature, only the fittest and the most adaptable survive and the collective wisdom of the consumer market will decide. Who knows; maybe 20 years from now the current crop of forecourt retailers may, too, have gone the way of Greasy George.

State of the Industry 2013

Apparel continues to lead the industry product categories, but other shifts are taking place.

Number CrunchProduct Matrix

PROMOTIONAL PRODUCTS

Product The Sleeping Beauty of E�ective Advertising

Unlike other forms of media where the advertiser’s message is seen as an interruption in what the consumer is trying to do, PROMOTIONAL PRODUCTS enjoy incomparable acceptance, sympathy and recall rates.

Even the smallest marketing budgets can achieve big-budget results using PROMOTIONAL PRODUCTS!

Brand exposure on PROMOTIONAL PRODUCTS clearly leaves a compelling impression on recipients when compared to other forms of advertising.

For peace of mind only buy from PPPSA membersPhysical Address: 2nd Floor, Building 3, Fancourt O�ce Park.Cnr Northumberland Ave and Felstead Rd, North Riding.O�ce: +27 (0) 11 321 0200 Email: [email protected] www.pppsa.co.za

66% of respondents remembered the Brand on the promotional product they received last year

79% said they were likely to do business with the company

84% said that branded promotional products increase Brand awareness

87% said that they kept a promotional product for longer than 12 months

56% of recipients of promotional products said their opinion of the brandor company was more favourable

Source: BPMA

As an adult, I would have been

appalled by the goings-on

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THe cOOleST brand amOng South africa’s youth is vehicle manufacturer bmW, according to the Sunday Times newspaper’s generation next Youth brand Survey for 2014.

Following bmW in the coolest brand Overall category were coca-cola and nike. The luxury car brand toppled beleaguered cellphone company blackberry from the top spot it occupied last year – showing that, among the youth, a year can make a huge difference in ‘coolness’.

This time, the coolest cellphone award went to apple iPhone, with Samsung and blackberry taking second and third spots respectively. The coolest cellphone application placed Whatsapp at the top of the pile, followed by blackberry messenger and then social media site Facebook.

What consumers define as good customer service

google has overtaken apple to become the world’s most valuable global brand in the 2014 brandZ Top 100 most Valuable global brand ranking. It is now said to be worth US$159-billion, an increase of 40% on last year.

This is according to the annual brand ranking study conducted by millward brown, an international research company that also operates in various parts of africa. The end of the global recession pushed up the values of the established worldwide brands, with apparel companies such as adidas and nike showing the greatest increases on average.

The Top 10 most Valuable global brands listed in the report are:

african telecoms giant mTn was placed 93rd in this year’s survey, one behind red bull and ahead of brands such as Prada and bank of america.

TwiTTer is growing across africa. according to research by international media company portland communications, South Africa has some five million Twitter users (2012 figures) with Kenya recording 2,4-million, nigeria 1,6-million and egypt 1,2-million.

As a result of this growth the online social networking and microblogging service – which has around 255-million users worldwide – is focusing its advertising efforts on the key South African market. Recently it was announced that the platform had appointed sa-based digital advertising company Ad Dynamo as its sales partner on the continent.

Speaking at the time of the announcement, Twitter’s vice president of direct sales for eMea, ali Jafari, said: “Companies have been on Twitter since day one. people come to the platform to connect with what they’re interested in, whether that is a sports team, musician or brand. By targeting Twitter conversations and engagements based on these interests, brands have the opportunity to grow their communities, tell their story, increase loyalty and ultimately increase referrals and sales. The south african market is an especially good fit for Twitter given the high percentage of mobile usage, and we are excited to bring Twitter ads to local advertisers.”

according to ad dynamo ceo sean riley, brands that are finding it challenging to cut through the clutter and connect with their customers are using Twitter to create meaningful, targeted and measurable interactions with the right people at the right moment in time. “We’re seeing brands putting a toe in the water, first with organic

While iT’S Common CAuSe ThAT consumers expect increasingly high levels of customer service – and that a key way for brands to create a point of differentiation is to deliver customer service excellence – what is less certain is what customers anticipate from a ‘perfect’ interaction.

A global research survey published by uS-based interactive intelligence Group, a global provider of software and services designed to improve the customer experience, attempted to find the answers by interviewing more than 1 400 consumers and 460 iT professionals in eight countries, including south africa.

The company says that, while not an explicit guideline, the overall findings do provide a framework for what consumers believe a superior customer experience should entail. Key findings include:

Consumers most value a timely response to a question or request, followed by a knowledgeable agent. in the 2013 survey, these two service criteria were reversed.

Consumers used the phone (51%) most frequently to interact with customer service or support agents, followed by email (18%), then Web chat (11%). Respondents preferred interacting with a live

Twitter in strategic local push activity, then with their first paid campaigns – and then immediately coming back for more when they see the results,” he said.

A recent example of the growing importance of a platform like Twitter to drive communication and interaction comes out of india, where Twitter marketing Director Rishi Jaitly told the Times of India newspaper that the social media platform had made a “massive contribution” during the country’s recent elections.

agent via phone, rather than using an automated interactive voice response (iVR) system.

Most people feel the acceptable telephone waiting time before a service representative becomes available is less than three minutes. consumers also feel that not needing to repeat information if transferred is the most valuable service a company can provide during an interaction.

when contacting businesses or service providers regularly, consumers find agents who have access to their previous service interactions to be extremely valuable. Consumers found an agent who is condescending or demeaning to be frustrating.

nearly half of consumers believe that, when using a social media outlet such as Facebook or Twitter to submit a question or request, a response should arrive within 10 minutes and 24 hours. a little more than half of the total respondents (53%) have used, or would use, Facebook to interact with a company for customer service.

By industry, respondents reported the sectors providing the best customer service experiences in 2014 were hotels, online retail stores and banks. The worst customer service experiences come from government agencies and utility providers.

For daily news updates covering topics of relevance to South african and african marketers, visit the Imm Institute website: www.imminstitute.co.za

google takes a bite out of apple

daily marketing news updates

coolest youth brands lauded

rank 2014

brand category brand Value 2014 ($m)

brand Value change

rank 2013

1 google Technology 158,843 40% 2

2 apple Technology 147,880 -20% 1

3 Ibm Technology 107,541 -4% 3

4 microsoft Technology 90,185 29% 7

5 mcdonald’s Fast Food 85,706 -5% 4

6 coca-cola Soft drinks 80,683 3% 5

7 Visa credit cards 79,197 41% 9

8 aT&T Telecoms 77,883 3% 6

9 marlboro Tobacco 67,341 -3% 8

10 amazon retail 64,255 41% 14

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Changing Customer Behaviour, by DesignDesign can be so much more than beautiful. It can be a powerful strategic tool to change customer behaviour. Join Yellowwood for a strategic discussion on semiotics and the launch of new research into effective design. Contact Al Mackay for more info: 021 425 0344 or [email protected]

Trends, markets, happenings and musings – in the spotlight and under scrutinyInshort

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Content is everyone’s tactic If advertising is the placement of paid commercials in the media, content marketing is the generation of content with the aim of engaging a defined audience in order to get this target market to interact with a brand. Once the preserve of pioneering and bold companies, today content marketing is the tactic of the ‘everybrand’.

The United Kingdom’s Content Marketing Institute (CMI) and the Direct Marketing Association UK (DMA) recently conducted a study of content marketing in Britain and found that 94% of marketers in the UK had adopted content marketing strategies.

A similar study done by the CMI in the US showed that content marketing usage among business-to-consumer (B2C) marketers was set at around 90% for 2014, up from 86% on the previous year. The survey also asked US marketers to rate their top 10 most effective content marketing tactics, which were listed (in order of efficacy) as in-person events, electronic newsletters, videos, social media,

Rising above the clutter of

brand-driven

content The growth of the Internet and the content

tsunami of social media has created a flood of material that is challenging the visibility

and success of brand-driven content initiatives. Mandy de Waal investigates the

realms of branded marketing.

In The eArly DAyS Of The InTerneT – when few marketers were engaged with the medium – it was easier to

create content and get noticed. now things have changed and content, whether online or offline, needs to be more credible, interesting and add more value than ever before in order to rise above the clutter.

Discovery, now South Africa’s most prominent health services group, offers a case in point. Wednesday, 2 October 2013 started out like most days did for the Dewet-rabie family, who had a set routine to retain calm and bring order to their busy lives.

Content marketing is now the tactic of the

‘everybrand’

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The family of five were in their car in the early morning – heading out into the day – when the unspeakable happened. A motorist jumped a red light and slammed into their car with devastating effect.

Tristan and Stephanie Dewet-rabie’s son Trent (5) was flung from the car. The couple’s other son, Daniel, suffered severe injury, was rushed to hospital and had to be placed into an induced coma. “The worst part was not knowing. When the doctor eventually told us that Daniel was brain damaged and that his lungs had collapsed, we were scared beyond words. The doctor prepared us for the worst and said that Daniel may recover partially, or maybe make no recovery at all,” Tristan tells the Discovery health marketing team, which has chronicled the family’s story as part of the brand’s narrative series, called ‘Medical Miracles’.

As a component of the health brand’s content marketing arsenal, the ‘Medical Miracles’ series is aimed at enabling its medical aid scheme members to share their good-news stories with the world and each other. This content marketing effort – which captured the story of Daniel Dewet-rabie’s remarkable recovery – also features stories from doctors and health professionals across South Africa.

established as a small, specialist health insurer some two decades ago, Discovery is now a multifaceted financial services company that has around six million clients across four continents. Content marketing plays an important role in building the organisation’s brand. “We take an integrated approach to marketing, and because we’re not big on advertising, content marketing and media relationships are incredibly important to us,” says rene Vosloo, head of corporate marketing and pr. “We want to create content marketing that’s special and touches people’s lives in a unique way,” she says, quoting Discovery founder Adrian Gore.

website articles, mobile content, online presentations, blogs and case studies.

“When one talks about content marketing, it is important to understand that we’re talking about the creation of something that is substantial and desirable. We’re talking about creating collateral that the consumer really wants,” says Dave Duarte, an executive educator who lectures at the University of Cape Town’s Graduate School of Business. Duarte was recently elected a ‘young Global leader’ at the World economic forum and is a director of the Ogilvy Digital Marketing Academy.

“When one thinks about content marketing it’s natural to think about people writing loads of articles about brands in the hope of luring readers,

The Medical Miracles brand narrative series enables Discovery Health clients to share their stories

>>

The humble company newsletter – introduced long before ‘branded content’ became an industry buzzword – remains a proven, cost-effective way to build brand awareness, position a firm as a thought leader and communicate regularly with clients and others

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Content marketing: Overview

CustomeRs

Company

pRoduCtstaRget

bRand

Website

blog

buyeRsonline

sales

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understand your demographic founder of Johannesburg-based social analytics firm Fuseware, Michal Wronski, states that understanding one’s demographic is crucial to a successful content marketing strategy. “A brand needs to understand what their audience wants to read, watch and listen to online – and create compelling content that resonates with them. Secondly, content marketing should be seen as a long-term strategy for brand building, not a direct-response mechanism for sales. Keep the brand visible within the content, but don’t make it about the brand or its products – sales pitches can destroy the credibility of even the best content,” he advises.

The business-to-business (B2B) sector is one that has embraced content marketing, possibly because the space is less contested than it is for B2C brands, but also because there’s a greater need for hard facts and substance than in the consumer space.

There’s a huge opportunity for those who get content right

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however that’s just ‘churnalism’ created under the guise of marketing. It is not substantial, nor is it desirable. The word ‘content’ essentially means ‘satisfied’. This should guide marketers in their thinking and the understanding that, when it comes to content marketing, creating value is what it is all about,” Duarte notes.

“The world is in the age of the attention economy, a place where the Internet has democratised marketing. As a result, content marketing has become incredibly competitive because so many brands are now using this tool. This, combined with the masses of information created on social and other networks, means that while it was once easier for brands to get noticed, in the earned content space brands need to work really hard and be incredibly smart to rise above the crowd. Because of this we’re seeing a lot of brands investing in paid content marketing which enables the promotion of branded content,” he says.

But it doesn’t mean that those who are marketing to B2B customers are necessarily getting the message.

Quoting a global report by the Chief Marketing Officer (CMO) Council, South African B2B marketing expert and author, Charlie Stewart of Internet marketing consultancy 2Stroke Interactive, says that of the 400 purchasing managers who were interviewed for the study, just 9% said they trusted the content they receive from their vendors. “To put that another way, 91% of the buying decision makers believed that the vendors were bull****** them by packaging one-dimensional, blatantly promotional and unsubstantiated information,” says Stewart.

“So, if you’re about to invest in content marketing, you’d be well advised to take a tactical time out and swot up,” he writes. “not surprisingly, the CMO Council found buyers valued reports from industry groups, customer case studies, analyst reports and product reviews – in that order. Fortunately, that’s quite a wide field, so there ought to be plenty for most B2B marketers to unearth in their own organisations.”

Stewart continues: “There’s a huge opportunity for those who get their content right. nearly 60% of buyers surveyed said they forwarded quality content to 25 or more people, and 28% said they sent the information on to 100 or more. So, if you want your content to be seen, worry about the message.”

A legendary example of the viral power of B2B content marketing is Volvo’s Jean-Claude Van Damme campaign which used the ‘epic split’ between two moving trucks to demonstrate the stability of the motoring brand’s so-called ‘dynamic steering’ to corporate buyers.

Wronski elaborates about the difference between B2C and B2B content marketing: “There are different strategies across industry verticals

and types of businesses, and a B2B strategy may have a vastly different angle to a B2C one. The overall goal of content marketing is generally to get more brand exposure, but a B2B brand may want to create trust and credibility through its content – such as posting an article on how to optimise the sales on an e-commerce store,” he explains.

Back at Discovery, one of the stories the brand has been telling is that of Dr neliswa Gogela, who received a r2-million grant from the Discovery foundation. The grant enables Gogela to study liver transplants at the famed Massachusetts General hospital (MGh) in Boston. South Africa is currently experiencing a shortage of hepatologists (experts in liver disease)

and the initiative will see Gogela spend two years at MGh, where the UCT physician will hone her skills.

When telling Gogela’s story at a recent health Media Summit, Discovery got an enthusiastic response from the universities, doctors and media present. “We had wonderful engagement from universities and other doctors who attended the event, as well as good

press coverage on this doctor’s story. I think that this was a great example of content marketing – we had a positive story to tell and it came across in the video and at the event. It illustrates that even an event is a content type and it doesn’t necessarily involve a piece of written content,” explains Marleze niemandt, who is part of Discovery’s corporate marketing team.

Additional reporting by Mike Simpson

1. The content marketing strategy needs to be integrated with (and extend) the broader marketing strategy in a manner that brings the brand to life in new and unexpected ways

2. Know upfront why you are doing it. Be clear as to how you’ll know when you’re successful – and measure, measure, measure.

3. Having a clear and well-articulated vision and structure for your online content space is essential.

4. It is important to have original content.5. An authentic voice is also important. We’ve worked hard to find a unique

tone and angle as to how we identify and craft our stories. We aim to get to the heart of an issue, or idea, with sensitivity and brutal honesty.

6. Diversity and variety of topics and points-of-view are critical.7. Headlines are everything! And great intro lines are the doorway into

any story.8. Let the content drive the navigation and user experience. The content

should be the hero, not your clever design or super navigational structure.9. Don’t be scared to reinvent your content space often and quickly, once you

start learning what your users want.Courtesy of Suzanne Stevens, executive director of marketing.

mandy de Waal IS A fOrMer BrOADCAST JOUrnAlIST WhO hAS Been pUBlISheD In The Guardian (UK), daily Maverick AnD Finweek, AMOnG OTherS.

Sharing content marketing learningsProminent insurance brand BrightRock shares learnings from its key content marketing initiatives.

Content marketing: Overview

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Why content strategy is king in social media Building true social media engagement means creating a

content strategy to hook the audience, not simply ‘being on’ social media. By Prof. David Dubois and Thomas Crampton.

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a chosen venue because it’s a great place to hang out. perhaps they know the owners or the other customers who, like them, regularly drop in to socialise. But without the rich aromas and great tasting coffee that they serve, would people still go there?

For the most successful companies operating in the realms of social media, they’ve got the fresh content, they’ve brought the crowd and, as long as they keep serving up this gourmet content, they’ve got a winning virtual hangout.

But more often than not, businesses merely tend to focus on securing their social media presence in the race to catch up with competitors. They ensure the coffee shop has a Facebook, Twitter or YouTube presence, but forget what they’re serving. perhaps if they were serving a particular brand of flavoured drink, they would bring in a few die-hard believers, but those who wanted real aromas and coffee flavours would stroll on by.

The content is what makes the medium social, not the other way around. An empty coffee shop is not a good strategy – and neither is an ‘empty’ social media presence.

A recent international roundtable, called ‘Social Media Matters Insiders’, brought leading academic and professional social media experts from different industries together and gave a good sense of the trends and best practices that can define successful social media content strategies.

Content: more than the room Social media managers typically face two key questions when designing their content strategy. First, what type of content should be created? This choice requires defining the goals that should be met beforehand (for example: educating customers; improving the brand

reputation; promoting a new product, etc). After goals are defined, managers should define what kind of content would best fit the goals being pursued.

SingTel, the Singaporean telecommunications giant, recently designed a strategy aimed at making the brand more relevant to customers and to showcase how it relates to consumers’ everyday lives. To demonstrate its proximity to customers, the company partnered with food celebrity Gordon ramsay to celebrate Singapore’s cuisine and created a set of videos covering an event that featured several local chefs competing with ramsay.

SingTel also partnered with a prominent local comedian and Twitter to get consumers talking about its new telecom services, producing short, improvised comedy sketches which were then published on YouTube.

For B2B companies, however, content marketing strategies are different. here, content takes the form of white papers or videos that are more research-focused, or that aim to educate customers about particular services. In B2B interactions, bringing human stories or sharing videos of executives to better explain the corporate perspective can be used to create a sense of proximity and trust with clients.

Keeping your brand front of mind means ensuring the target audience is regularly entertained and also informed, especially for businesses dealing with governments or in regulated industries. That means video is a common approach – the more viral

and memorable, the better – mixed in with white papers and research articles. These can link to other created media that has serious research related to a company’s product or a service.

Creative content The second question social managers face is: how do I create content? having a timely response is very important, particularly to those people who ‘live their lives’ through social media and where images on the likes of Instagram, pinterest or Tumblr have become the ‘new print advertising’. Consider biscuit brand Oreos’ response to a sports stadium power outage during the 2013 SuperBowl in the uS: in less than four minutes, the social media team had created a unique execution ready to be tweeted: “power Out? no problem. You can still dunk in the dark”. It resulted in 15 000 retweets, 20 000 Facebook ‘likes’ and extensive media coverage.

The competitive edge of those with real-time content is having senior management’s buy-in on something that happens quickly.

But content doesn’t always have to be created in-house. One brand at the Ogilvy-organised round table hired a local performer and invited people to tweet suggestions for his performance; comedy videos were posted on YouTube soon after, and the final result was successful engagement. That’s no surprise to Google, which has suggested that brands in the social space are talking to Generation C consumers, a group who “care deeply about creation, curation, connection, and community”.

deciding to outsource content creation requires educating and motivating customers and employees to create content. To meet this new goal, a growing number of companies, such as technology brand Intel, train employees who wish to engage on social media for a week and help them curate content to improve consistency and reliability.

Content is what makes the medium social

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To motivate customers to create content, brands can opt to design social rewards to help customers build new relationships, or enrich existing relationships with others. Often however, executives can look into a company’s own processes to find content that could be used.

Consider Blendtec, a small uS-based producer of blenders for coffee, smoothies, cocktails, etc. noticing that the company engineers would regularly blend blocks of woods to test the product’s robustness, the marketing team had the idea to produce a series of videos featuring the CeO blending objects as diverse as golf balls, light bulbs, nike shoes or even a mini Justin Bieber. This initiated a durable buzz, with the initial videos scoring 6-million views in the first week.

Springboards for contentwhile having great content is a key step in the design of a good content strategy, perhaps more important is to ensure that this content is shared and distributed. This depends both on the resources available and the use of different viral forces. To ensure enough resources are available, some

companies – such as Intel – require at least 60% of any campaign budget to be dedicated to distribution.

To promote the distribution of content, organisations must leverage influencers (e.g bloggers or celebrities who can spread the word by re-tweeting or reposting a message), match the environment (e.g producing content related to romance or dating during valentine’s day) and balance both the message’s social utility and content utility. That is, think both about increasing the reasons why someone might share the message (social utility) and giving reasons to the viewer to like,

consider or buy the target product or service (content utility).

In addition to having humorous or emotional content, a good way to create a viral message is to make sure the message will have practical value – for instance, educating customers about the brand, or giving them a new tip that is useful to them in their everyday lives. As an example, consider the 8-million views achieved by a simple YouTube video posted in 2011 that describes an easy way to shuck (get rid of the outer covering of) corn.

In an ever-changing social media environment, content strategies are here to stay. Overall, best practices entail thinking about content creation, as well as about its dissemination. Only companies that can successfully allocate resources to both these tasks will make their foray into the social media jungle a successful one.

David Dubois is assistant professor of marketing at INSEAD Business School, based in France. He holds a PhD in Marketing from Northwestern University’s Kellogg School of Management in the US. Thomas Crampton is global managing director of Social@Ogilvy, named by the Holmes Report as the ‘Best Digital Consultancy in the World’ for 2013. This article is adapted and republished courtesy of INSEAD Knowledge (http://knowledge.insead.edu). Copyright INSEAD 2014.

According to the US-based Content Marketing Institute, “Content marketing is a marketing technique of creating and distributing valuable, relevant and consistent content to attract and acquire a clearly defined audience – with the objective of driving profitable customer action.”

B2B content is more research-

focusedWhen there

was a power blackout

at the 2013 SuperBowl in

the US, the social media

team for Oreos biscuits

flighted this Twitter

advertisement only four

minutes after the blackout

began

What exactly is content marketing?

Content marketing: Social media

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The science of tapping into shopping mall

consumers South Africa’s shopping malls generate enormous retail

revenue. Yet, until now, relatively little independent research has been done to understand the millions

of people who shop there. By Kerry Chipp.

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shopping in major retail malls – the likes of sandton City, Canal Walk and gateway – accounted

for a whopping r407-billion in spend in 2013. Yet what actually happens at this coalface, where supply and demand meet, is little understood.

Yes, there is a lot of data in the market. We have information from the all media and product survey (amps), the unilever institute, FutureFact and avusa’s Wealth survey in the private sector. statssa weighs in with a number of national projects and data sources. But these studies are more focused on consumers, citizens and employees.

When it comes to the behaviour of people in the shared environs of a shopping mall, there is very little that is collected for the marketing profession as a whole. malls and retailers can, and do, collect their own research – but this is both proprietary and through the lens of the individual retailer or mall.

For the shopportunities study, the gordon institute of Business science (giBs), with the assistance of primedia unlimited mall division’s sponsorship, aimed at providing the frame for a view of what happens at the mall – both in terms of why people think they go and what they actually do when they are there. it was important to giBs to be as scientific as possible, so we went for a rolls-royce sampling method of stratified random sampling across time of day, and day of week, in seven major malls in three provinces. our sample was a robust one of 4 200 people.

shoppers, as pointed out by michelle van trotsenburg of Y&r (‘Why the age of shopper marketing is upon us’, Strategic Marketing February-march 2014) are different to consumers because they are not necessarily the end users of what they buy. We found that they are also not entirely driven by planned behaviour and are open to the environment and respond to its stimuli. What does this mean for marketers? let’s look at the take-out from different perspectives.

Malls are not created equal super-regional malls, such as menlyn in pretoria and gateway in umhlanga, have a different role in shoppers’ lives to those of regional malls like gugulethu square in Cape town and southgate in johannesburg, which means different areas of focus for the owners.

larger malls are all about the experience, the variety of offerings and the ability to provide excitement. these are destination spots – the ‘third place’ after the first and second places of the home and workplace.

regional malls, on the other hand, are about making the necessities in people’s lives happen. these are the spaces where people pop in for top-up shopping, run to the bank and visit the local coffee shop. so navigation and ease of access is more important than comfort and experience.

if malls are not created equal, it is the larger malls where brand activation and excitement can be best optimised. super-regional malls are where new brand offerings should be made, whereas regional malls are about helping people with their daily tasks. the larger malls are very good for activations and events that generate excitement, while regionals are good for more personalised taste tests and individualised client engagement.

Tenant mix anchor tenants still generate the majority of traffic, with the biggest pull being generated by the large clothing, food and department stores. What was surprising in our results was that the less frequent shopping occasions – such as the purchase of medical items, books and furniture – generate larger numbers of traffic for the large (anchor) tenants than these tenants do in return.

For example, it makes sense that clothing shoppers will exhaust themselves across clothing brands and have no need for cellular phone products. the cellular phone shop, however, will bring people in for a specific purpose and then many of these wander into the anchor category stores on their way out. the lesson here is: never underestimate the impact that unplanned shopping by patrons of the smaller tenants can have on the anchor stores.

Shoppers are not entirely

driven by planned behaviour

Malls need to be aware of the placement of coffee bars in among the anchor tenants, in order to capitalise on the opportunistic nature of spending by certain shopper groups

Brand activation and excitement can be best optimised in the larger malls

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The unintentional shopper one out of every three category visits (a category being food, restaurants, clothing etc.) were not intended at the outset and four in 10 purchases were not planned. this amounts to a whopping monthly spend of r13-billion that happens, on a whim, at the point of purchase.

Clearly, there is an openness on the part of consumers to leave the buying decision to the ‘shopping occasion’ (when they’re actually on-site at the mall), rather than making the decision at home before leaving. We need to be aware that being in the purchase environment can trigger decision making and, even if the retail aisles are no longer rigidly used as a ‘shopping list’, consumers are still using the purchase place as a source of inspiration for what they need and a suggestion for what they would like to treat themselves with.

in terms of what triggers these unplanned purchases in the mall environment, we found that 36% of

all spend was explained by in-mall advertising, including marketing activations and advertising displays such as videos. so, in the seven malls that we sampled – and where the average foot count is around 800 000 shoppers a month – a third of what people buy can be shaped by in-mall advertising.

there is a catch though; we found that multiple touchpoints – multiple executions of an advertisement across platforms – are more effective than a single execution. For marketers, the message here is to rather seek many in-mall touchpoints and dominate mall areas in order to achieve greater impact.

Consumer occasions For the study, we used an occasion-based segmentation in order to make the purpose of the visit a driving factor in our groupings. different ‘consumer occasions’, not surprisingly, attract different spending patterns, with the second highest per capita stemming from the ‘take a Break’ shoppers.

this group of shoppers has come to the mall to disconnect from their lives and are there to relax. retail therapy for this group is alive and well – they are at ease and therefore open to making purchases. they spend nearly double, per capita, than any other group and their cumulated spend is the second highest after the ‘goal directed shopper’.

the latter is the largest group and comprises shoppers who have come for a clear reason, which is probably why they do not spend as much per person as the take a Break shopper.

the group with the lowest per capita spend is the ‘leisure shopper’. these

individuals are younger and, unlike the take a Break shopper, they have come to connect rather than disconnect. Keep an eye on them as they are connected socially within the mall as well as with new media.

the ‘Business shopper’ is one of the most interesting. individuals in this group have among the highest per capita spending, as they are taking advantage of being in the mall. they don’t often get to such places, so once there for a meeting they seize the opportunity. We believe this group is time-poor rather than poor in economic terms, so they are probably not the most price-sensitive.

Our final group we called the ‘General shop’. they rely on the mall for their list of things to do, claiming they are there for a ‘general shop’ rather than a few select items. one thing is certain, they are not there for entertainment or the Wi-Fi – this is the shopper who comes to push a trolley around a mall in the old-fashioned sense. they have no interest in online platforms.

the different shopping occasions present varying opportunities per mall. it is unlikely that the smaller malls will truly be able to capitalise on the leisure and the take a Break shoppers as these occasions are more experience-orientated and involve variety, thus biasing these shoppers to super-regional malls. smaller malls certainly can, and do, attract the other groups – from the Business shopper popping in for a quick meeting with coffee, to the goal directed shopper who is in the mall for specific needs.

larger malls need to be cognisant of placement of restaurants and coffee

bars among the anchor tenants to capitalise on the opportunistic nature of the spend of these groups.

Clicks, swipes and textsonline retailing, as the masterCard survey demonstrated earlier this year, was not pronounced among those in the shoppertunities study. naturally, though, our shoppers were in a mall at the time the study was carried out.

of the mall shoppers involved, only 8% shopped online. this indicates that online is not yet the threat that it could be, but it does pose a greater challenge for the super-regional malls whose patronage is of higher lsm, as well as for malls competing for the Business shopper. the latter group were far more likely to shop online, and when they did so it was for the variety of eBay rather than OLX (a country-specific website hosting free user-generated classified advertisements).

Younger shoppers and those in KZn were more open to Wi-Fi as a free mall offering which can also enable location-specific messages to be sent to shoppers within the mall environment. But we have to question whether the generally low use of Wi-Fi could be due to the lack of a clear value proposition for consumers.

they may understand it as free and unsecured data, but offerings beyond this are limited.

so, as marketers, we need to up our game when it comes to taking advantage of technology. one of the means of doing this is through more location-specific mobile messaging. if the shopper is far away from the mall, they cannot take up the offer recently smsed to them. But if it is transmitted across Wi-Fi when they are in the mall, they have an increased ability to act on the message itself.

In conclusion malls are fascinating places. the great deal of unplanned activity suggests that there is a fair amount of elasticity and opportunity for marketers, as malls are shared social spaces with flexible dynamics, rather than rigid goal-directed ones.

it remains to be seen whether this continues to hold true as shoppers feel the pinch of higher interest rates and lower economic growth. even in tough times, though, there will probably be room for the small pleasures of spoiling oneself, and even cash-strapped consumers window shop and, when they have the cash, they’ll be ready to buy again.

Kerry ChIpp is a senior leCturer at giBs, Where she supervises and oversees the mBa researCh proCess. she puBlishes in the area oF Consumer Behaviour in dYnamiC marKets, With partiCular interest in emerging Consumers. she Was the lead projeCt

researCher For the shoppertunities studY, WhiCh Was ConduCted With FinanCial BaCKing From primedia unlimited.

Super-regional malls are where

new brand offerings should be made

Different shopping occasions

present varying opportunities

Super-regional malls, such Gateway in Umhlanga, have a different role in shoppers’ lives to those of regional malls

Retail: Shopping MallS

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So you’ve got a new idea to launch or want to maximise on an existing product? Where to start? As one of the world’s leading survey-based market research groups, Ipsos offers custom research solutions and consulting services, including concept and product testing.

We also do shopper studies, usage and attitude studies, tracking systems, brand loyalty research, volume forecasting, marketing models and advanced analytics.

So if you’re ready to make the leap from bland to brand, speak to the trusted name in marketing research since 1975. Change the way you look at the world.

NOBODY’S UNPREDICTABLE

+ 27 11 709 7800

www.ipsos.co.za

[email protected]

IT ALL DEPENDS ON YOUR POINT OF VIEW

Convenience shopping and the continued rise of the service station forecourt South Africa’s major retailers and big fuel brands are joining forces to create a growing new retail channel with high quality and 24/7 convenience. Danette Breitenbach investigates.

Not too maNy years ago, south africans who wanted to go shopping after hours had to

settle for stale pies from the corner café and spaza shop – or out-of-date stock from the dingy outlet at the all-night service station. But now the stale chips and heartburn pies are becoming a thing of the past as retailers and fuel companies team up to make the service station forecourt a shopping experience to be reckoned with.

according to Nielsen research statistics, the forecourt market accounts for around 4% of the country’s retail sector and, says forecourt screen company Graffiti Digital, an average of 1 000 till transactions per day. these new forecourts are today’s corner café – but on steroids and offering designer coffee, fresh food and produce, as well as the traditional ‘five Cs’ – chips, chocolate, cigarettes, Coke and coffee.

In a world where convenience is everything to time-stressed consumers,

Fruit & Veg City and Caltex are among the companies that have formed high profile retail/fuel partnerships on the forecourt

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service station forecourts have become a notable shopping channel. Partnerships include Woolworths and engen (which opened their 50th joint store at the end of last year), Pick n Pay with BP, and freshstop (fruit & veg City) with Caltex. even spar climbed onto the bandwagon when it announced last year that it was opening its first spar express store in conjunction with shell.

the reality is that the petroleum industry is highly regulated, often regarded as a commodity by consumers, and cannot compete on price. so a combination of fuel quality, facilities and customer service is typically used to drive growth. as a result, the business model has evolved to the point where nearly all service station forecourts of any significance are now classified as convenience stores.

Challenges and opportunities this has led to new challenges for fuel-retail partnerships, but also great opportunities. the former include the need for new supply chains, integration of different systems and processes, greater tracking and accounting requirements for fuel and dry stock, and more complex management and control of cash – as well as the need to contend with tight margins in what is a very competitive marketplace.

this evolution has also changed the profile of the service station owner or manager, who needs to be an astute business person who understands marketing, management, finance, retailing (including fMCG) and have a broader understanding of business in general.

Forecourts have evolved from mere fuel-sellers into sophisticated micro-retailers says gill randall, joint managing director of the Newspaper advertising Bureau (NaB). Its roots research, which is conducted every three years by independent research company tNs, found that consumers place a high premium on convenience. this trend,

she says, puts forecourts in a position where they can significantly increase market share.

“But they have to keep in mind that there is no such thing as a loyal shopper anymore. the consumer goes where his or her mood takes them and, with a proliferation of retailers to choose from, consumers shop around. Forecourts are just another option,” she notes.

the variables are time, money and emotional energy. randall explains that while forecourts may be open 24/7, they are constrained by the same factors as other competing retailers. therefore, continuous marketing and advertising efforts are vital to bring people into the on-site stores. “they cannot rely just on people who are filling up their vehicles with fuel to shop at their forecourt,” she points out.

according to randall, no profile of a forecourt consumer exists; instead the profile changes according to the geographic location. “take, for example, a forecourt in sandton in northern Johannesburg and springs on the far east rand – they are very different locations with very different customers. there are no specific demographics except for the local geography and the forecourt retailer shares the demographics with other retailers in the area. therefore, to be successful they have to understand the people who live in that locality.”

so each forecourt retailer must provide the products their specific area demands. “While coffee and fast foods sell everywhere, chicken might be more

popular in soweto, wraps in sandton and burgers on the east rand. If forecourts cater for their audience, the potential results are huge,” randall observes.

Fresh produce one high profile partnership is fruit & veg City and Caltex, with the former operating freshstop retail outlets at Caltex service stations. Last July the Freshstop close to Cape town international airport was the winner of the 2013 insight naCs international Convenience retailer of the year award for its performance over a short period of time.

It attracted more than 160 000 customers and had sales of over r4-million in its first quarter of operation. this double-storey flagship store has a full kitchen and bakery, a steers fast-food outlet, supa-Quick vehicle fitment centre, car wash, sit-down area with free Wi-Fi, parking and conference facilities.

there are now more than 160 Freshstops situated across the country, more than double that of its nearest competitor. However, while the Caltex brand was compelling even before the partnership, its forecourt offering was not. Like most fuel brands it had created its own convenience forecourt brand – in this case, star mart. However

while the concept was effective in the 90s, a better retail experience was being called for by consumers in the second decade of the new millenium.

“In order to stay relevant, we needed to enhance the overall consumer experience at our retail stores by responding to the demand for convenience shopping. the partnership with fruit & veg City, through the Freshstop brand, enabled us to achieve this,” says rochna Kaul, general manager for products at Chevron south africa, which owns the Caltex brand.

For her, the service at the forecourt retail outlet is no different to what the petrol attendant does. “It is all part of the overall experience. the Caltex brand name draws in the customers, but the experience keeps them coming back.”

according to Kaul, Chevron has a strong focus on supporting entrepreneurs and Black economic empowerment (Bee). “We work closely with the retailers who run the independently owned service stations to enhance their overall product and service offering. therefore, we are integrally involved in assisting them to grow their business.”

she says the company is continuously seeking to innovate in an effort to enhance customer experience and to grow the Caltex brand. to this

Continuous marketing and

advertising efforts are vital

In a world where convenience is everything to consumers, forecourts have become a significant shopping channel (photo courtesy Graffiti Media)

Spar announced last year that it was opening its first Spar Express store in conjunction with Shell. This is a Spar Express forecourt outlet in Ireland

>>

There are now over 160

FreshStops situated across

the country. This is the Airport City outlet in Cape Town

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end, it has partnered with standard Bank on a loyalty programme called uCount that will enable customers to both earn and spend points on its forecourts. another focus is to increase rollout of the Freshstop concept from the current 160 to all 800 Caltex outlets nationwide.

Cutting edge of retail Joe Boyle, director at Freshstop, says fuel retailers are heading towards being at the cutting edge of retail, to the point where a consumer can buy almost anything at a forecourt. “We are looking at many offerings – including chicken, a fish and chip outlet, pizza, grilled meat and coffee. We are also testing a doughnut shop and smoked meat brand.”

the situation is much improved from

where it was five years ago, he believes, with potential supply chain challenges resulting from the greater complexity being relatively easily resolved. “the distribution process is not difficult as most retailers already have established supply lines and forecourts are just added into these. Previously it was often a greater obstacle because of the small quantities and long distances involved.”

Indeed, the public’s perception of forecourt convenience stores was perhaps a bigger impediment than managing the more complex supply chain. “Consumers viewed convenience stores and forecourt retailers as rip-offs who charged them up to 50% more for a product than a normal retail store,” Boyle notes. “We have had to change that widespread view – as well as the mindset of the forecourt owner – and bring competitive prices into the space, as well as get forecourts to sell more products.”

It has also been necessary to educate the forecourt owners about fMCG and related products, with fresh fruit being a prime example “Now, forecourt owners have become so savvy that they call us to ask when they are receiving whatever fruit is in season,” he says.

A win-win situationthe advantage for service stations is that retailers offer them the opportunity to reach more consumers and attract more repeat business. the service stations, on the other hand, give the retailer a wide selection of established and strategically placed sites across the country. technology has also added to what was sometimes an austere and uninviting forecourt environment. menu boards can be changed to suit breakfast and lunch times, while screens at the tills inform consumers of the weather, news and traffic in their area.

Graffiti Digital, a division of Graffiti media, has installed more than 400 screens at the main tills on the forecourts of Caltex, total, Bp and shell fuel retailers across the country. the company bought the screens to south africa through a partnership with UK-based amscreen.

Kyle Metz, GM at Graffiti Digital, explains that the screens run 24/7 and content includes live news and sports updates provided by times media, live traffic feeds, as well as advertising campaigns. He adds that on-screen ad campaigns have led to an increase in sales at point-of-purchase, especially fMCG products.

according to research undertaken by Nielsen, there are over 5 000 forecourt service stations in south africa and nearly r15-billion in sales are driven by forecourt convenience. on average, consumers spend almost double at forecourt convenience stores than they do on fuel purchases.

DAnette BreitenBACh Has worKeD extensively in tHe BUsINess-to-BUsINess seCtor in a ConsultinG, puBlisHinG anD eDitorial CapaCity. until its Closure IN JULy 2013, sHe Was tHe eDitor anD puBlisHer of AdVAntAge magazINe, a B2B puBliCation tHat speCialiseD

in aDvertisinG, MarKetinG anD MeDia.

IMM_Institute_ad_FA C.indd 1 2013/02/22 4:14 PM

Low margins and product commoditisation have forced the service station business model to adapt and seek new revenue streams

Potential supply chain challenges

have been easily resolved

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There is perhaps no greaTer indication that frozen yoghurt has moved from ‘teen fad’ to

mainstream business in south africa than the recent part-acquisition of the industry leading Wakaberry chain by franchise giant Famous Brands. The latter is a dominant player in the market and has the likes of Tashas, Vovo Telo, Milky Lane, Juicy Lucy, steers and Wimpy under its wing.

after just three years in business and with 33 stores across the country, Wakaberry is the fastest-growing frozen dessert brand in the country and plans to open another 10 outlets this year, according to marketing manager, Luise peters, who adds that expansion into other parts of africa is also under consideration.

The brand has helped spawn a mini-industry and other operators have now adopted similar practices, such as self-service. The growing number of contenders all draw from a similar creative palette, although Wakaberry claims to be ‘the original’.

“i don’t know if Wakaberry was the first,” says Andy Rice, branding and advertising commentator and analyst, “but it certainly was the first to do it on a reasonably large stage and the first to do it – I think – with such professionalism.”

rice, who is chairman of specialist brand strategy consultancy Yellowwood, says he was introduced to Wakaberry, like many other people, “under pressure from a teenage son”. He was immediately impressed with the brand.

“Firstly, it was intrinsically innovative at the time,” he explains, adding: “I hadn’t seen the same physical offering from anyone else. What i saw was a really different product, with extremely high standards of presentation and a very strong sense of its own personality. i think someone had really thought through what kind of tone they wanted to convey, and actually delivered accordingly.” When

When ‘sour milk’ spells sweet success

Frozen yoghurt is a phenomenon that took America by storm, moved on to Europe and has now hit our shores. Also known as ‘froyo’ or ‘frogurt’, the creamy-tasting frozen dessert is being lapped up by consumers across the country. Jon Pienaar examines the trend.

The growing number of contenders

draw from a similar creative palette

rice featured it on his weekly feature on Johannesburg-based Talk radio 702 he gave it his ‘hero’ award.

professor Michael goldman, Strategic Marketing columnist and assistant professor at the University of san Francisco, as well as an adjunct faculty member at the gordon institute of Business science (giBs) in Johannesburg, believes that one of the main reasons for the growth in popularity of frozen yoghurt within medium- to higher-income segments

The frozen yoghurt sector appears to have moved from ‘teen fad’ to mainstream business in South Africa

>>

is the trend towards healthier food alternatives. “Frozen yoghurt is also benefiting from an uptick in interest in yoghurt and probiotics,” he says.

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But goldman cautions that growth may be erratic: “As other food categories have ebbed and flowed over the past decades, it is likely that froyo brands will experience periods of high growth and more moderate development. innovation adoption theories suggest that when a newer product, brand or category ‘crosses the chasm’ from early adopters to the mainstream, then growth is rapid and is accompanied by increased competitors trying to take advantage. as rivalry increases and growth becomes more stable, firms need to innovate with new flavours, occasions and benefits to trigger further growth.”

The ‘experience’ While the strategy of self-service in this environment is not unique (several Us outlets pioneered the concept), it remains novel in south africa. The idea behind it is to create an ‘experience’ for the consumer that goes beyond mere consumption of the product. in many of these frozen yoghurt venues there’s music – even pop videos – playing, brightly coloured decor and ‘trendy’ branding. Then there is the very tactile act of pulling a lever to deliver a swirl of product into a brightly coloured paper bowl and, finally, choosing toppings from an array of fudges, sprinkles, fruits and candies.

a snap survey of some teenagers from pretoria and Lonehill in northern Johannesburg provided the following:

Kyle (19) (favourite flavour: mixed berry) – “I love variety and the idea of mixing all different flavours; stuff you normally wouldn’t combine.”

Zanne (18) (favourite flavour: crème soda or granadilla sorbet) – “I prefer it to ice-cream and it’s healthier.”

Sebastian (18) (favourite flavour: mixed berry) – “I don’t like sweets

in general, but when i go with friends I really enjoy it. It’s social.”The attraction for parents includes the perception of the product being healthier. The ‘all natural’ approach is a selling proposition that most, if not all, the competing local brands espouse and includes such tactics as recyclable cups and using rBsT-free organic milk (from cows that have not been treated

with the synthetic rBsT hormone in order to increase milk production).

Wakaberry and smooch brands also attest to being halaal, while the Filo brand offers kosher flavours in some locations.

Initial marketing challenges Wakaberry’s Luise peters found that marketing the brand was challenging at the outset. She explains: “When we first launched there was no money for marketing. all brand building was done through Facebook and then Twitter. This has proved to be astoundingly successful for us. our customers love engaging with us online and we ensure the return engagement and flow of conversation is constant. Our Facebook page is the third biggest froyo page worldwide and our Twitter account is the second biggest froyo account worldwide.”

Teenager Zanne describes how a new store was launched at a mall near her school in Centurion, close to Pretoria: “There were signs put up on the road to the school. everyone at school took photos of the signs and posted them on their Facebook profiles ... everyone was excited about the new Wakaberry.”

peters says that, by contrast, print media hasn’t worked for the brand due to the high number of publications in the market, adding that she’s planning to start experimenting with radio in the future.

another important aspect has been the brand identity. Explains Peters: “The look and feel of the brand is of

paramount importance to us – as it should be to all marketers. The consumer’s love for the brand was one of the key drivers of growth and will continue to be. part of this is a fresh, funky approach to design.” She says a ‘brand bible’ is strictly enforced in all the stores and the range of branded merchandise is also being grown.

Is it sustainable?When it comes to longevity, the product has shown resilience in the Us over the past 20 years. andy rice echoes Michael goldman’s concern that there may be a ‘dip’ in interest after a while. “i think the only risk is one of a short-term interest cycle,” he says, adding: “i wonder if it’s being fed by enough target market from below, before they migrate out of the top?”

The other factor to consider, he believes, is competition from other brands in the fast-food sector. rice explains: “My question would be; in what consideration-set, in what repertoire from a consumer perspective, does it live? so, if you choose to spend r30 on Wakaberry, what would be

your alternative consideration brand? is it only competing in the frozen yoghurt sector, or is it up against Juicy Lucy (another Famous Brands franchise), or Kaui? Where is the next-considered brand and, therefore, what is its product portfolio?”

in order to grow and compete, the brand may need to diversify, according to rice. “The idea of having a range of product offerings is a good one as well. if i look at one i rather like myself, which is Cinnabon (a cinnamon roll franchise) – they’re a very indulgent brand. But they’re also starting to diversify from their classic cinnamon-based sticky gunge, into cupcakes and other things. so they may have found their product base too narrow – and that, I suppose, is something that Wakaberry might find,” Rice suggests, before jokingly adding: “Before we know it, they’ll be offering double cheeseburgers with fries!”

Jon PIenaar is a regULar prodUCer For The Carte BlanChe TV prograMMe and has Been pUBLished in The LiKes oF BuSineSS Day and JSe Magazine.PH

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UK-based frozen yoghurt brand Snog has based its marketing strategy on being a healthier and guilt-free treat

A desire for healthier food alternatives is

fuelling the trend

A fresh and funky approach is integral to the strategies of the various frozen yoghurt brands

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Prominent retailer named the country’s most

reputable companyDespite a few reputational issues of its own in recent times, one of South Africa’s most upmarket retailers has been named in a

new study as the business with the best reputation in the country.

WoolWorths has overtaken mobile operator vodacom as the most reputable

brand in south africa. the latter saw its reputation among consumers plunge, something that has been attributed largely to its decision to go to court (along with fellow operator Mtn) to oppose the lowering of so- PH

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called ‘call termination rates’ by the telecommunications industry regulator. these are the fees that one operator charges another operator to terminate a call on its network.

this was revealed by the reputation institute’s national reptrak pulse survey for 2014, which ranks the largest listed companies in south

africa by revenue and familiarity. now in its ninth year, the survey tracks businesses that are engaged in commercial activities, have a reasonable amount of familiarity with the general public, and are not wholly-owned subsidiaries of other companies.

Vodacom was last year’s top firm, but lost a notable 9,35 points to fall to sixth position on the table – one position below rival operator Mtn.

Woolworths, meanwhile, saw its reputation strengthen marginally from 73,98 to 74,31 points. according to the reputation institute, the clothing, home and food retailer led the field on all reputation dimensions: leadership; citizenship; governance; workplace; innovation; products/services; and performance.

“the 2014 survey shows that Woolworths is in a league of its own. its success comes in an environment in which south african corporate companies are suffering a bloodbath in their reputations,” the institute’s partner for africa, dr dominik heil said. “Woolworths has managed to break out of this logic because it has a sound stakeholder management strategy. it demonstrates that engaging with stakeholders is not a loss exercise. if you create value for all your

stakeholders – and not just for your shareholders – and manage that well, the benefit ‘pie’ for everyone will grow.”

interestingly, this is despite the giant retailer suffering some controversies of its own. in october last year it was involved in a public row and social media storm after an independent local designer accused the chain of plagiarism by reproducing one of her designs on a range of scatter cushions without her permission.

in another incident in early 2012, Woolworths announced that it would withdraw its entire vintage soda range from the shelves after Frankie’s olde soft drinks, a small independent

manufacturer, complained that the retailer had copied certain aspects of its packaging design. this complaint was upheld by the advertising standards authority (asa) and the decision was portrayed in many sections of the media as ‘david beats Goliath’.

trevor ndlazi, the reputation institute’s country manager for south africa, said the biggest driver of reputation in the country in 2014 was products and services at 15,2%, with citizenship only slightly behind at 15%. “product and services, citizenship, financial performance and innovation explain almost 60% of reputation; workplace, governance and leadership made up just under 40% of what drives reputation this year,” he said.

standard Bank, one of the ‘big four’ financial institutions, was placed second in the 2014 survey, although its score was only marginally better than last year. all the other banks dropped, with

high-profile FNB being the biggest banking-sector loser by plummeting over nine points. nedbank and aBsa dropped 4,18 and 4,39 points respectively.

remarkably, it was only Woolworths and standard Bank that improved their reputation in the past year. all the other companies in the survey fell, with the biggest reputational losers being mining houses Goldfields (-10,20) and BHP Billiton (-21,03).

“What is needed is either a new model of doing business, or for companies to take actions that regain the trust of consumers,” said ndlazi.

the survey is conducted annually in January and February among 1 462 unique respondents, from whom 3 860 rates were obtained. respondents’ distribution was balanced to the country population on age and gender.

to be included in the survey, companies had to meet the following criteria:

all companies were among the Financial Mail’s 2013 top Companies listed on the Johannesburg stock exchange (Jse) based on total revenues;

all companies were at least somewhat familiar to the economically active segment

of the general public.the following are the top 10 most reputable companies in south africa, according to the reptrak Pulse 2014 survey:1. Woolworths2. standard Bank3. spar4. pick n pay5. Mtn6. vodacom7. sasol8. absa9. shoprite10. old Mutual

Woolworths is in a league

of its own

Number one … Woolworths benefited from a sound stakeholder management strategy

Going down … Vodacom saw its

reputation among consumers plunge

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Reputation management

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Google takes a bite out of Apple

Is it farewell to PR’s babes, balloons and hot air?

ImagIne the scenarIo: you’re shooting a new television commercial on behalf of a client. you’ve made

an announcement on Facebook and one of your team members is filming so that clips can be posted to youtube. you have stills ready for Instagram, while yet another team member is posting regular tweets which may well be incorporated into the press release that’s sent to journalists once shooting has wrapped.

Welcome to the brave new world of the communications of the future, as envisaged by tebogo Ditshego, the 29-year-old ceo of sandton-based Pr consultancy Ditshego media and a man who has, among other accolades, been named one of Forbes magazine’s 30 most Promising young entrepreneurs in africa.

he adds that this scenario is very much in the not-so-distant future, as convergence on this scale is already taking place. Look at CliffCentral.com as an example. the online radio initiative by former 5Fm radio DJ gareth cliff >>

can – in addition to Internet streaming of the live radio feed – be downloaded to cellphones and was, until recently, broadcast via DstV’s satellite television platform.

Ditshego himself has made use of multiple platforms simultaneously in his Pr work for clients. “our goal is to create Fomo – fear of missing out – whenever we host an event; creating interest via twitter and youtube,” he says. he believes this approach has been extremely successful, as the consultancy is frequently approached by journalists who were not at the events but, nevertheless, have had their interest piqued to the point that they wish to provide post-event coverage.

Perhaps it is the desire to move beyond traditional Pr mechanisms that has seen the fledgling Ditshego Media acquire such clients as Vodacom, the read a Book sa community initiative, and cosmetic brands avon and Justine. the consultancy also assists with the

implementation of csI projects for or tambo International airport and the national youth Development agency.

Personal accoladesthe Forbes accolade is not the first to be bestowed on the youthful ceo. In 2010, his freelance contributions to newspapers like Business Day, Sunday Times and The Sowetan saw him named one of south africa’s leading thinkers in the latter publication. at the time, Ditshego was completing his honours in communications and media studies at the university of Johannesburg; a course selected because he saw public relations as an opportunity to marry his skills in writing and public speaking. he later supplemented this qualification with a certificate in public relations, boosting his practical experience while studying by taking posts within government departments and Pr consultancies.

several jobs later, with career highlights such as heading media

Up-and-coming public relations man Tebogo Ditshego has firm ideas about the future of the PR industry in South Africa. Lisa Cloete speaks to this forthright 29-year-old.

On The Up – Young Lions Ascending the MArketing LAdder

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Fox and Univision worth US$90-million annually – a five-fold increase on previous TV rights. Important to the continued growth of the game (and the business of the game) was Stevenson’s desire to broadcast matches “when kids who play soccer could watch them”. The deal sees consistent national scheduling of matches, including a weekly double-header on Sunday evenings. Recognising the changing demographics in the US, the Spanish-language Univision network will have its own exclusive Friday night match.

One of the soccer brands likely to benefit from the new deal is New York City FC, an MLS expansion team jointly owned by the New York Yankees baseball team and English champions Manchester City. The team, which will play its first season in 2015, has been actively building its brand since its launch in 2013.

Marketing the world game to sports-mad AmericaIt’s referred to as the ‘Beautiful Game’ and is followed by over

three-billion fans globally, but soccer’s growth has lagged behind home-grown pastimes in the US for decades.

The team has been building its brand since 2013

RECENT MaRkETINg STRaTEgIES on this side of the atlantic, however, hold renewed

promise for the future of the sport in america.“What we’re bringing you is the growth of a soccer nation.” This is how gary Stevenson, the president and managing director of Major League Soccer’s Business Ventures started his four-page presentation deck to sport broadcasters in mid-2013.

Recent data supports his optimism. a 2011 survey by broadcaster ESPN ranked soccer as the second most popular sport for 12-24 year olds in the US (behind american Football), while 40% of the TV audience for the MLS professional league is under 34. Facebook announced earlier this year that the US had the second highest number of soccer fans on their platform at almost 50 million, with half of these tuning in to the final of the 2010 Fifa World Cup – up 44% on the 2006 final.

as John guppy, the founder of gilt Edge Soccer Marketing told Bloomberg –Businessweek: “Millennials are the biggest driver of the sport right now … they are looking for their own identification … soccer fits that bill”.

Stevenson went on to negotiate an eight-year broadcast deal with ESPN,

a recent campaign included co-creating the club’s badge or logo with their increasing number of ‘founding fans’. In February the club launched the #myNYCFC team badge generator tool, inviting fans to submit shield ideas. Each of the submitted crests then became a pixel in a ‘badge of badges’ mosaic of the new logo unveiled on March 20th after more than 100 000 fans voted for one of two professionally designed badges.

Understanding the need to tap into history and city identity, the winning badge was inspired by the old NYC Subway Token, which was used for

50 years as the standard fare for a ride. a pentagon representing the five boroughs of New York was incorporated to reinforce the club’s connection to the entire city.

a follow-up social media campaign used the hashtag #5boros1city to create a citywide ‘New York City FC inspired’ photo contest. The photo entry to receive the most votes received on-field credentials at a NYC FC game. These marketing activities have added some early momentum for a club hoping to attract their fair share of New York’s almost 20-million potential soccer fans.

If the efforts prove successful in the longer term, the payoff could be huge.

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Michael GoldMan (@michaelmgoldman) is an assistant Professor at the University of San Francisco in the USa and adjunct Faculty at the University of Pretoria’s gordon Institute of Business Science (gIBS) in Johannesburg.

safferinamericaSouth African academic Michael Goldman gives a marketing perspective from the US.

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what these people think about current trends, read their comments, and evaluate their sentiments around the brand environment, because public opinion doesn’t always neatly dovetail with the messages communicated by the media.

remember, too, that while twitter might be the most accessible of social media platforms, other channels – such as google hangouts and Instagram – also have a role to play, he says.

another battle which the industry must continue to fight is a definition of what, precisely, Pr is. It’s not about painting an organisation in the best light possible, even when all evidence points to the contrary. “We’re not spin doctors,” Ditshego insists. “moreover, we can only amplify and promote good products – we can make what is good, better; but we can’t make something that’s bad, good.”

he would like to see public relations become a profession where practitioners under-promise and over-deliver, so that it is viewed as a discipline with integrity – one where information is communicated as factually as possible and without manipulation.

as for his own future, Ditshego is hoping to increase the market share of the business so that increased profits can be ploughed into creating an international footprint, with offices elsewhere in Africa and beyond. another fervent hope is that Pr will, one day, move out of its silo to take its place as part of an integrated communications framework.

relations for the south african reserve Bank’s launch of the mandela banknotes behind him, Kagiso-born Ditshego (Kagiso is a township west of Johannesburg) was ready to go on his own. Launching in the economically repressed atmosphere of 2011, he quickly found that it was one thing to have lots of impressive experience as a Pr practitioner; quite another to wow potential clients as a business owner. “One of the first things I learnt was the importance of tailoring your offering to suit the client,” he explains.

Ditshego believes that, in the main, south african Pr agencies do a good job. “But there’s no denying that we lag behind [global] industry trends,” he states. We’ve arrived back at the topic of social media, and he points out that there are still Pr practitioners – agency heads, moreover – who don’t yet have twitter accounts, let alone understand the workings of social media and how it can be harnessed to achieve Pr objectives. “there’s a synergy between social and mainstream media. they need to feed each other as sources of information,” he observes.

corporate social investment (csI) management is another area where the local industry needs to sharpen its skills. he contends that too many companies have not grasped the true essence of corporate social investment; instead, they operate industry-specific social investment. “say, for example, a logistics company issues a few bursaries for tertiary study. While this is valuable, it’s not enough. In a developing country like south africa, csI should contribute towards nation building; we need to identify the areas where our society is lacking and examine how we can use our resources to fill those gaps.”

Ditshego has taken his own advice by spearheading read a Book which, having amassed more than 30 000 members in just two years, is the country’s most widely followed book club. “Improving literacy isn’t a function of Pr, but the reality is that reading improves school results which, in turn, helps to reduce crime. It also introduces kids to new worlds, giving them an idea of how to handle issues such as gender and racial discrimination.”

New vs traditionalWill the emphasis on elements like using social media to promote csI issues eventually replace traditional Pr techniques? not at all, Ditshego answers – communication vehicles like the traditional press release will always have a role to play. that said, if resources allow, he strongly suggests a separate social media campaign – with an independent budget – to supplement any traditional public relations strategy.

It is perhaps this cost issue that’s causing companies to shy away from using digital platforms optimally, but he insists that they need to interact with consumers online. If they don’t, they’re losing out on opportunities to build a rapport with the market and gauge opinions around their brands.

nor can this be achieved by random tweets sent out during normal working hours. rather, true success depends on having a round-the-clock digital presence, ready to capture those consumers who aren’t interested in the night’s television viewing or who are taking advantage of cheaper after-hours’ data rates. Find out

Lisa CLoete Is a JohannesBurg-BaseD FreeLance JournaLIst sPecIaLIsIng In marKetIng, meDIa, BusIness, heaLth anD LIFestyLe PuBLIcatIons.

Ditshego displaying his public speaking skills to students at the University of Johannesburg’s Doornfontein campus

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Help … nobody understands

digital media!

Richard Lord laments the lack of understanding that media planners and marketers have for digital and its place in the wider media mix.

>>

Since immerSing mySelf in the digital media world after many years in more traditional strategy

and planning roles, i have come to one conclusion … nobody really understands digital! clients don’t fully understand it, media strategists and planners don’t understand it and even digital people don’t really understand it.

Sure, on a cognitive level, clients, creatives and media people alike appreciate that digital should be a part of their media plans. But they don’t really know why, they don’t understand what for, and they certainly don’t know how much money they should be putting into it. in other words, they fail to realise what digital’s role is within the media mix and what digital can bring to the party.

for far too long, digital has sat on the periphery of mainstream media and been treated like a stepchild, with only occasional pennies thrown at it. this is evidenced by the fact that nielsen’s Adex (which gauges advertising expenditure) only measures digital as a 3% medium in South Africa. granted, this 3% is woefully understated as only a handful of local websites are measured and the computation only takes into account display advertising, while completely ignoring search, social and mobile media ads.

But even if we said that ad spend on digital media was double what is

reported, it would still only be marginally ahead of outdoor and a long way behind radio – let alone print and tV. this is astounding for a medium that is as truly measurable and results-driven as digital is.

How to treat digitalSo how should the digital medium be treated by advertisers and their agencies? the answer, i believe, lies in adopting a fully consumer-centric approach to media. i don’t believe for one second that the consumer differentiates between tV, radio, digital or print. to him or her they are all just media platforms to be consumed seamlessly, based on a need for relevant news, information, entertainment – or whatever else the mood suggests.

the lines between traditional and digital media are blurring more and more. twitter is now our source of news, youtube is just another tV channel, our iPads are our newspapers, and we watch tV and chat about what we are watching via social media on our cellphones. We listen to the radio and enter the station’s competitions via mmS, USSD (Unstructured Supplementary Service Data, or short codes), tweets and texts.

We mix and match our mediums, starting on one device and finishing on another – all depending on what our need is at that specific moment. And believe me; these habits aren’t only limited to top-end lSm 10 consumers.

So, if the consumer doesn’t differentiate, why should we treat digital any differently to other media? the

short answer is that we shouldn’t. All media should be looked at holistically and the decision as to what to include in the media mix must be based on sound and age-old media selection principles.

1. What are my campaign objectives?2. Who is my consumer?3. What media does he/she use?4. What media types will best help to

achieve the objectives?5. Additionally, what role should be

assigned to each media type in the mix? While one media type might be really good at achieving certain objectives, other media types will achieve other goals.

the above points are how we decide whether we use tV, radio or print. So why not digital? Why is it that, after all of the data has been analysed and optimised and we have the perfect mix of tV and print, someone will say: “hey, we’ve got r50 000 left in the budget, let’s give it to digital. maybe they can do some facebook?”

it makes me wonder why marketers and/or their agencies are surprised when, under these circumstances, digital doesn’t seem to work. indeed,

it becomes a ‘catch-22’ situation: digital is never allocated the budgets that it deserves because of the perception that “it doesn’t really work”… and so, of course, it doesn’t.

The language of digitalSo why do we do this? Because most of us don’t understand the digital platform, and those who work in digital haven’t done themselves any favours by declining to assist traditional media people to understand the new medium. they speak a different language – mostly in three-letter acronyms about mPUs, cPcs and cPms (to name just a few).

they sit in separate teams, are allocated to different divisions, or work at independent and specialised digital agencies. they make no effort

Twitter is now our source of news, YouTube is just

another TV channel and our iPads are our newspapers

Digital has been treated

like a stepchild

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Media strategy: OpiniOn

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to integrate with the traditional media teams or to try and demystify digital and make it more accessible. indeed, they themselves don’t understand where digital fits into the overall media mix or how it can be used to amplify a tV or radio campaign.

these digital demigods shake their heads and smile condescendingly when the traditional guys ask ‘silly’ questions – and so the traditional people step back, absolve themselves of all responsibility and just let the digital folk get on with it.

But, lest i am accused of laying all the blame at the door of the digital people, those in the traditional media have also made no effort to try and understand or integrate digital. they stick to what they know and remain in their comfort zone. they plan traditional media strategies first and, if there happens to be some budget left over, they might throw it the way of the digital team. their argument is that digital is too small, it’s top-end only, and there isn’t enough critical mass.

Niche or not?So let’s explore this argument for a moment: is digital a niched medium, or is it a fully-fledged medium in its own right? As in any argument or debate, the numbers don’t lie and we can put it into perspective (figures correct as at early June 2014).

AmPS (All media and Product Survey covering the adult population of South Africa) tells us that 9-million South Africans have accessed the internet in the past seven days.

By way of comparison, 11,7-million people watched DStV in the same period.

google says 4,5-million South Africans watch youtube every month.

facebook tell us it has 10-million monthly active users in South Africa, with 93% of these users gaining access from a mobile device.

5,5-million people read an average issue of the Daily Sun.

twitter has 1,8-million monthly active South African tweeters, again with 80% of users via a cellphone.

radio highveld has 1,8-million listeners every week.

6,5-million South Africans access mxit a month.

6,6-million people listen to radio station metro fm weekly.

there are 12-million google searches in SA every day … and on weekends 65% of it is via a cellphone.

Online measurement company effective measure shows that 3,9-million unique browsers accessed News24.com monthly.

clearly, then, digital media must be a major force to be reckoned with in the

South African media landscape – when measured against all sectors of the market, not just the top end. So we need to get to the point where – just as we think of Business Day, Financial Mail and Finweek when targeting a business audience – then mxit and twitter should be thought of in the same vein as radio station 5fm and metro when we are targeting a 16-24 age demographic.

As media planners and strategists, we need to remember that digital is a major part of many South Africans’ lives and we can no longer afford to ignore it. mxit users, for example, spend 95 minutes a day on the platform; while the average South African facebooker checks their facebook 13 times a day.

i believe that the future success of media agencies lies in developing strategists and planners who understand and embrace all media – and the days of digital specialists or tV specialists are fast disappearing. clients are looking for agencies that can provide them with complete media solutions. So for a channel as important as digital to be treated so half-heartedly is not only short-sighted, but does a complete disservice to media agency clients.

RicHaRd LoRd iS ASSOciAte meDiA DirectOr At the meDiA ShOP, A SPeciAliSt meDiA PlAnning AnD StrAtegy Agency With OfficeS in SAnDtOn, cAPe tOWn AnD DUrBAn. he hAS Been in the meDiA inDUStry fOr neArly 20 yeArS AnD hAS WOrkeD in SeVerAl cOUntrieS AnD

AcrOSS mUltiPle meDiA tyPeS.

The consumer does not differentiate

between media platforms

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Media planners and strategists must remember that digital is a major part of many South Africans’ lives

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Media strategy: OpiniOn

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Giving customers an

increasing say in the value

chain. An Ikea employee assisting a

client (right) and (below)

an Ikea customer self-

assembling the personalised

furniture he ordered

The dark side of customer co-creation

The trend towards greater levels of

product co-creation is creating new customer service challenges and opportunities. Professor Nicola Kleyn examines

recently published research on the topic.

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they had miraculously pulled my data from the last five Schengen visas? Would I be more irritated if this visa was denied, than if I had not had to co-create my application yet again? The answers are ‘yes’ and ‘yes’!

So it was gratifying to see how a team of academics had designed a series of experiments to test how customer satisfaction varies under conditions of high and low co-creation, and in service failures and successes. The authors used theory to develop a number of hypotheses which they tested in four studies.

Testing the hypothesesIn the first study, consumers were exposed to a fictitious travel service where they were required to give varying levels of personal information – the more provided, the higher the level of co-creation. Some clients ‘succeeded’ in making their bookings whilst others ‘failed’.

Statistical tests confirmed that, where customers had invested a significant amount of time and energy in making the booking and these efforts succeeded, they were more satisfied than those who had been less involved co-creation. The reverse, however, occurred in the case of failure in the high co-creation scenario. These customers were far less satisfied when their booking failed, than those who had not received any customisation options.

The second study involved creating a fictitious on-line shoe retailer called Design Your Shoes. Customers in the high co-creation scenario were given options to select specific materials, choose their shoe colour and put their names or initials on the product. Once again, they were given lower, or higher, opportunities

to participate in the design process and asked how satisfied they expected to feel on completion of the process.

As before, clients were randomly assigned to delivery and non-delivery groups to create service failures and successes. But, in this study, customers were given different treatments to remedy the service failure – some simply received a discount, whilst others re-engaged in the design process.

The authors found that service failure under conditions of high co-creation was experienced more negatively by customers who had high expectations of what they would receive. Thus, the authors suggest that, when services fail, customers perceive the failure as having been co-created and this enhances negative feelings that result in lower satisfaction with the outcome.

The third and fourth studies used the scenarios above to investigate the differences in customer perceptions under varying conditions of co-creation in the service recovery situation.

Where customers had not invested time and effort to create their products, in the event of service failure they did not want to invest in co-creating a remedy and expected the company to do all the work. However, in situations where clients who had invested in co-creation were offered the opportunity to work with the company to find a remedy, their satisfaction levels were higher.

For example, in the case of the shoe manufacturer – where the company went to great lengths to remedy the situation by giving a discount on the offer, as well as working with customers to redesign their shoes – customer satisfaction levels were even higher than when customers did not experience any service problems at all!

The results The outcomes of both studies show that giving customers opportunities to co-create or customise their purchases can result in higher levels of customer

satisfaction than those who do not receive such opportunities.

However, firms that climb on the customisation bandwagon need to understand the elevated risks of service failure under such conditions, and must be alert to the relatively larger decreases in satisfaction felt by customers who co-created their offering. Under such conditions, corporate strategies to manage service recovery need to be designed and effectively managed.

Thus, the findings suggest that working with customers to give them an offering that will satisfy their desires for customisation and compensate them for the time and energy wasted is the most effective solution.

Fortunately, my visa went through. But if it hadn’t – I wonder how well the visa processing service would have managed the situation? I suspect that there would have been very little effort to work with me to recover the situation. But, in an ideal scenario, perhaps they would have applied these findings and assisted me to obtain the outcome I was looking for … with a discount of course!

Professor Nicola KleyN IS A memBer OF THe mArkeTIng FACUlTY AnD DepUTY DeAn AT THe UnIverSITY OF preTOrIA’S gOrDOn InSTITUTe OF BUSIneSS SCIenCe (gIBS). SHe reSeArCHeS, COnSUlTS AnD TeACHeS In mArkeTIng AnD BrAnDIng, WITH A FOCUS On COrpOrATe BrAnDIng.

References:Heidenreich, S., Wittkowski, K., Handrich, M. & Falk, T. (2014). The dark side of customer co-creation: exploring the consequences of failed co-created services. Journal of the Academy of Marketing Science. Published online 14 May 2014.

Customer co-creation has

become somewhat of a buzz word

WHAT DO ApplYIng FOr A vISA, using the services of a coach, ordering groceries online and

trying to make your child sit still at the hairdresser have in common?

All are examples of customers working with providers to co-create the product they wish to purchase. The quality of the outcome rests, to a varying degree, on the client’s input during the process of creating the product or service.

Customer co-creation has become somewhat of a buzz word in both academic and practitioner circles and, in an era of increasing customer demand for customisation and self-expression, this emphasis is unlikely to abate. Technological advancements now enable providers to work with their clientele during the product creation phase to produce highly specialised offerings. Similarly, customers are seeking to wield more control over what they buy.

For some firms this is nothing new. Consider consulting services, where the quality of the outcome is usually dependent on the customer working side-by-side with the consultant.

But for manufacturing organisations who are trying to move away from mass production to give customers an increasing say in the value chain (think birthday cakes, cars or Ikea furniture), understanding how customers are involved in a co-creation process and re-defining customer satisfaction is more of a challenge.

The title of a new article published in the Journal of the Academy of Marketing Science in may recently caught my eye. Heiderich, Wittkowski, Handrich and Falk (all from europe) have written a paper titled ‘The dark side of customer co-creation: exploring the consequences of failed co-created services’. much has been written about co-creation, but this is the first piece I know of that investigates service recovery in these contexts.

perhaps the piece got my attention because I had just invested a few hours filling out forms for a Schengen visa. The process not only extracted hefty payment, but much time and energy. Did this make me more invested in the process than if

The trend towards customised birthday cakes is a simple example of co-creation involving both the client and the supplier

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Hot off tHe Press

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Embrace Africa’s many cultures to enhance your marketing effectiveness

>>

One Of the key reasOns that no easy answer is emerging as to ‘how to

do business in africa’ is because sa companies have, for years, mistakenly viewed the rest of the continent as a single market, ignoring the reality that there are over 50 countries with 2 000 dialects and languages. But simply acknowledging this situation is not enough, because even within countries, cities and regions there are differences when it comes to product preferences and consumer demand.

then there’s the question of perceived ‘quality’, which might not be the same as the ‘quality’ perception in a developed country. although, if you’re talking high-end products from global luxury brands, then the expectation is the same as that of a consumer in London, new york or singapore. add to this the trade-offs between quality and general affordability that are sometimes necessary in order to gain economies of scale.

terry Behan, CeO of brand experience agency VWV across africa and the Middle east, has spent the last two decades living and working in emerging

markets and has an in-depth knowledge of doing business in africa. he is also the author of the book Connect with the Continent, which was published in January this year.

Behan says that, at the same time as we are seeing an unprecedented demand for new products and services on the continent, the african consumer is becoming more discerning and aspirational – although not necessarily in precisely the same way as a consumer in sa or a different african country.

for example, nigerians did not see Woolworths as an aspirational brand, which is in conflict with the high-end positioning it occupies in many other markets. as a result, ‘Woolies’ left the country late last year citing “high rents and duties, as well as the difficulties of marketing to consumers in africa’s most populous country”. nigerians will rather save up to buy a second-hand pair of Levis than a brand they do not view as aspirational.

a south african marketer needs to appreciate how each country or market works at a qualitative level and then understand the business culture of the different countries, Behan says, explaining that in West africa conversations are boisterous, sounding like they are giving you a hard time. “the east Coast is very polite. But while they will engage with you, they never say ‘no’, which makes it challenging to get to a conclusion.”

for him, brands face two main challenges in making the transition from sa, or another developed market, into the rest of africa: communications and distribution. Many brands go in with a communications model that is Western-centric, but the continent has leap-frogged ‘through the line’ and is much more responsive to direct, social and experiential marketing.

“On the West Coast the blog www.bellanaija.com is so influential that if you had a product launch, but it did not appear on the blog, it did not

happen. If you got married and your pictures are not there, your wedding did not happen. On the east Coast, DJs and local personalities are influential – often with very large social followings.”

the other challenge is good old fashioned supply chain management. finding a reliable means to distribute your product into a market that is often still 80% informal is a challenge, notes Behan. But a growing number of marketers are realising that ‘what works at home won’t work here’ and are seeking specialist advice on the development of bespoke strategies.

“We are finding that clients are asking us to help them communicate their brand in a unique manner and also create distribution channels for them. recently

in East Africa, specifically Kenya, we assisted Orange in communicating to the youth market,” Behan says.

the strategy involved engaged young people through street dance – underground ‘crews’ dancing off against each other – which is very popular in the country and created a digital platform for crews to upload their dance videos and allow the public to vote for them. the videos garnered 2,5-million votes and, by using Orange data services, the brand increased its sales.

“the lesson for international brands is to engage a local audience contextually and quickly and via the channels they want to be engaged through; then you will see results,” Behan believes.

Mark West recently retired after being the head of marketing for satellite tV giant MultiChoice africa for 20 years. MultiChoice, together with brands such as Mtn and saBMiller, is a pioneer brand into the rest of africa.

he warns that south africans companies can be viewed on the continent as selling expensive products and ripping other markets off. Making yourself part of the local scene cannot be emphasised enough, he says.

While the potential opportunities in Africa for SA companies are widely acknowledged, the practicalities of gaining a competitive advantage on the continent are still being debated. By Danette Breitenbach.

A major success for MultiChoice has been the Africa Magic TV channel, which started off as a purely Nigerian offering

Trade-offs between quality and

affordability may be necessary

Finding a reliable means to distribute your product into a market that is often still 80% informal is a challenge in many parts of Africa

Marketing in africa

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In the early days, MultiChoice also sent sa-based campaigns into other countries. “We quickly learnt that the ‘we know best’ philosophy does not always work. today, although our big corporate campaigns are shipped to the continent, our local agencies do the smaller campaigns.”

West points out that colour is important. “strong, bright colours work well; so does localising colour for a specific country. For example, in Nigeria we use a lot of green and white (the colours of the national flag). We often pull the country’s flag colours through a campaign to give it a more local feel.”

he emphasises good local media relations and understanding local nuances and language. “In tanzania, swahili very strong. But english is more widely spoken in kenya, while in nigeria you can use english with a bit of pidgin.”

a major success for MultiChoice has been the africa Magic tV channel, which started off as a purely nigerian channel but has now become an integral part of the wider DstV bouquet. While viewers loved the channel, the content was not very good, he explains.

however, by investing in the local movie industries within african

countries, not only has the quality of the content improved; there are now multiple africa Magic channels in english and vernacular languages. the broadcaster promotes africa Magic as being “dedicated to african programming made by africans – from soaps and drama series to lifestyle shows and movies”.

the company invested in local soccer in key countries the same manner, West says. “sport is a key driver in africa and local soccer is very well supported, but the quality of the fields, timing of matches, etc was not very good. as a company we invest in a number of leagues, such as the nigeria Premier League. this allows us to ensure that the matches start on time and that the fields are in good shape.” The key lesson, West emphasises, is not to go and take advantage, but to invest.

saBMiller is another south african brand that has been operating

elsewhere in africa for many years. By observing the mistakes of others, the brewing giant learnt very early on not to try to force its brand on a country. for the company it is about managing local brands and using local ingredients and suppliers wherever possible. for example, local people are used in advertising campaigns and promotional items like t-shirts are also produced in-country.

Dave Carruthers, marketing director for saBMiller africa, says growing local brands is about being conscious of the characteristics of the various countries. “for example, in nigeria and tanzania we are mindful of their Muslim populations. We respect their religion by providing alternative beverages and minimising our activities over religious observances such as ramadan.”

Beer, he says, is probably the most local product of a country and often part of its social fabric. “In terms of culture generally, traditional beer markets have evolved over many years. You will find each country has a classic mainstream beer brand that is representative of what made the nation what it is today. saBMiller has developed a core mainstream brand in each one that is weaved into the culture. so in tanzania the beer brand is kilimanjaro, in Uganda it is nile special and in Lesotho it is Maluti. these brands therefore represent what the country stands for and is famous for.”

the company has done the same with sport; linking a brand to the national team and the national league of that country.

for premium brands, though, the marketing strategy can be more multinational. “When we have taken south african brands such as Castle Lager, stout and Lite and launched them in other parts of africa, we have treated them as premium products positioned as regional or international brands. We only do this if there is a gap in our brand portfolio and then we do it very carefully,” Carruthers says.

the effect of culture on the marketing strategies of multinational firms in nigeria was studied in 2001 by PP ekerete of the Department of Business administration of the rivers state University of science and technology. the examination of 20 multinational firms’ subsidiary offices in Nigeria found that culture had an effect on product offering, pricing, promotion and distribution.

The most influential cultural elements, the study said, are language, religion beliefs and ethnic values. It went on to recommend that “multinational corporations should embrace these marketing concepts in

their operations, their promotions and products adapted to the environment”.

Over a decade later, the same remains true for sa companies looking to enter the continent. as Behan says: “africa is not europe; nor is it asia. It is unique and it takes time to get beneath the skin of a specific market to understand it at a deeper level.

however, understanding the continent is impossible; you must understand each country individually.”

West’s advice is to do your research. “each country is very different. travel to that country and live there for a month. Walk the streets, talk to the people and go to the local bars – not the five-star hotels and restaurants. Understand what and where the people are buying. Do not just depend on a research house. It takes years to know a market, it does not just happen overnight. When we started we put up our own posters, handed out our own pamphlets. Be hands on. Be prepared to get your hands dirty.”

The East Coast is polite and they

never say ‘no’

SABMiller has developed a core mainstream brand in each African country that is weaved into the culture. In Tanzania that brand is Kilimanjaro

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Don’t try to force a brand on a country

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Do delays undermine the value of discounts? Price promotions can be a double-edged sword, new research from Columbia Business School in New York shows.

A customer decides to buy A bestselling book from an online store. As she browses, she sees

a banner advertisement announcing that all bestsellers are currently 20% off. Will receiving this discount increase her enjoyment of her purchase? And does this depend on whether she downloads the book and begins reading it immediately, or receives the book several days later in the mail?

New research shows that a delay in consumption can negate the positive effects of a discount and even render the consumption experience less enjoyable. “People are quick to take advantage of promotions – whether for economic reasons or to justify the purchase of something that they want to buy but don’t really need,” says Professor Leonard Lee of columbia business school in New york city, who worked in the study with PH

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However, past research has shown that promotions often have negative effects: consumers learn to expect promotions from frequent discounters and may resist future price increases from the seller. And, as Lee’s research shows, the timing of consumption after a purchase can also influence a consumer’s experience, often with unintended results.

the reason for this, Lee explains, is that both emotional and cognitive forces are at work when a consumer takes advantage of a discount. When the product is consumed immediately after payment, emotional forces tend to dominate the experience. “the positive mood that you’re in after enjoying a discount can play a very large role when you consume a product right away – whether that is watching a video on demand or buying a fast-food meal,” Lee says.

Declining with timebut over time, these positive emotions tend to decline. cognitive forces have a greater influence if consumers have the dVd shipped, or take home that fast-food special. in these cases, timing is relative; for example, a 20-minute drive home before consuming the meal would have a similar effect to a three-day wait for a dVd to arrive in the mail, as opposed to watching it instantly. in these circumstances, if a consumer purchased a product at a reduced price, she might feel less motivated to recover the ‘investment’ of its cost.

Lee and his research partner explored the relationship between consumption and enjoyment in four experiments involving products such as chocolates and music downloads. in one such experiment, participants were given us$1 and asked to buy one of two types of truffles – both of which were in fact the same. All of the participants were told that the truffles had a retail price of us$1, but half received a 50% discount.

Half of each category of participant – discount or no discount – ate a truffle as soon as it was paid for, while the others received a truffle a week later (although all were actually purchased just one day before consumption to control for freshness and taste.)

the researchers found that when the truffles were eaten immediately, the promotion enhanced the consumption experience. However, when payment and consumption are decoupled by a time delay, the effect was reversed.

“marketers want consumers to buy their products, and promotions can be a way to loosen purse strings,” Lee says. “but if you consider the consumer relationship from a long-term standpoint, in terms of customer satisfaction and brand loyalty, you might want to pay more attention to whether the customers are truly enjoying the consumption experience.”

When a discounted product is consumed after a delay and the experience is therefore less enjoyable, a customer may become less likely to buy the product again or to recommend the brand to friends, he cautions. For consumers, this research shows that getting a great discount doesn’t always increase happiness. shoppers who plan on consuming a product later might be better off resisting that promotion and holding onto their money.

Leonard Lee is associate professor of marketing at Columbia Business School in New York City. Reprinted from Columbia Ideas at Work by permission. Copyright 2014. Columbia University.

Writing in a 2012 article for Strategic Marketing, Abel noted: “Once this truth has been revealed to consumers, the brand can never re-establish what were false perceptions in the first place. This leaves only the horrible option of not using a discounted price to delight, reward or to increased basket size – but as the only tool your brand has to defend, rather than grow, market share.”

He continued: “So, before you put your stuff on sale, cut your margin, or hand everything over to the ‘couponeers’, decide on your pricing strategy. Remember that pricing is a key component of your marketing strategy and cannot be ad hoc or nebulous”.

Promotions often have

negative effects

claire i. tsai of the university of toronto in canada. “the conventional wisdom is that if you like discounts, you’re going to enjoy the product even more with a promotion. in fact, that tends to happen only when the product is consumed immediately after it is paid for.”

discounts and promotions, an enormously popular marketing strategy, crowd email inboxes and are on prominent display in retail stores.

For consumers, these offers have tangible benefits: financial savings, an increased willingness to try new products, and the emotional rewards of taking advantage of a good deal. For marketers, promotions are an easy way to increase demand from both existing and new customers – at least in the short term – and can help ward off competition by making it harder for smaller companies to enter the marketplace.

Beware the perils of discounting Regular discounting exposes the lack of a compelling value proposition for brands, warns top South African advertising industry executive, Mike Abel.

A delay in the consumption of

a product – such as the time taken

between order and delivery –

can negate the positive effects

of a discount

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Pricing strategy

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While India poses many marketing challenges, the enormity of the numbers make it a market not to be ignored, writes Jacinta Jonas.

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potential. “Despite a couple of bouts of reform and spurts of growth, India’s economy has never achieved the momentum that has dragged much of East Asia out of poverty,” observed the London-based The Economist in a May 2014 article.

The 10th largest economy in the world grew at an average rate of just under 7% a year from 1997 to 2011. However, growth has since slowed to

around 4,5%, in part due to pessimism about the government’s commitment to further economic reforms. The country has now placed its hopes in new Prime Minister, Narendra Modi, who has promised to create jobs and attract investment to grow the largely free-market economy.

According to Britain’s Financial Times, “the country needs to create nearly one million jobs each month merely to employ young citizens reaching working age – let alone to clear the backlog of unemployed and underemployed youths, or provide for those migrating en masse from farms to cities.” Part of the problem, according to the respected newspaper, is India’s failure to build its industries, making it a net importer of industrial goods such as mobile phones and toys – largely from China.

This failure stems from the country’s strict labour laws, poor infrastructure, erratic power supply, corruption and a tangle of red tape. Companies with more than 100 employees, for example, have to ask permission to dismiss workers, but this is almost never granted, according to The Economist.

India has failed to build its industries

THE SCALE AND LOgISTICS involved in India’s recent general elections drew the world’s

attention to the sheer size of the second most populous country in the world after China. A record 551-million voters cast their ballots at almost a million polling stations in an election that took a remarkable five weeks to complete.

These numbers alone make it an appealing marketplace for companies

from around the globe looking for growth. The middle class, for example, is estimated at more than 250-million people, with almost a third of the 1,2-billion inhabitants living in urban areas. The median age of the population is only 24.

But the growing population offers both opportunity and pitfalls, as massive unemployment could prevent the country from reaching its full

The SA-India linkSome SA businesses have already Several businesses have already tentatively explored the Indian market, among them SA Breweries, Sanlam, FirstRand, De Beers and restaurant/cocktail bar chain News Café. The latter has franchises in Delhi, Hyderabad and Mumbai catering to the large expatriate community.

The Airports Company South Africa (Acsa) and Bidvest group have, since 2006, held a 30-year concession to manage and upgrade Mumbai’s Chhatrapati Shivaji International Airport, while giant media company Naspers owns an online travel business called Ibibo.

Betting on the billion: can India fulfil its potential?

Country Fact FileLanguage: English and HindiCurrency: Rupee Population: 1,2-billion (World Bank 2012)Capital: New DelhiGross national income per capita: US $1 530 (World Bank 2014)

Far left: The imposing Taj Mahal, now a World Heritage Site, is one of the iconic symbols of India

Left: Mumbai’s airport is managed by the Airports Company South Africa (Acsa)

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Pay attention to the marketing potential of rural India

There are over 240-million

Internet users

FirstRand was the first African bank to get a banking licence in India, with CEO Sizwe Nxasana telling a business event in February: “In India we operate in the bottom end of the market, in the slums, where not even the Indian banks operate.” This allowed the company to access India’s largest market, although he admitted that “margins are paper-thin”.

“It has forced us to look at new ways of making money in a low margin environment and come up with ideas and innovations,” Nxasana said. An example was the creation of low-cost and robust ATMs manufactured with an Indian partner, which helped reduce the bank’s cost structure, he told the audience.

Several SA pharmaceutical companies, including Cipla and Dr Reddy’s Laboratories, are involved in joint ventures with Indian counterparts.

Sasha Lotter*, who works in the pharmaceutical industry and travels between SA and India, has found doing business there professional. “Indians are often amused when they hear that South Africans regard India as a poor country,” she says.

But Lotter does find it more hierarchical than SA. “There are strong hierarchical structures and deference or unquestioned obedience to leaders is expected. Excessive critical questioning from anybody, including foreigners, is often frowned upon,” she says.

The marketHigh levels of urbanisation provide a potentially attractive market. A US Commercial guide to India, however, points out that although the bulk of the purchasing power appears to be concentrated in its urban markets, the majority of the population lives in rural

areas. “It is said that the real India lives in the villages. All marketers, both [local] and foreign, have benefited by paying attention to the marketing potential of rural India,” according to the guide.

“Analysis of consumer purchase data over the last several years by various research agencies has shown that rural markets are growing as disposable income and literacy levels increase, and television access stimulates demand,” it adds.

Indeed, the influence of media has changed rural consumption patterns as households have become more brand conscious. But poor infrastructure is a major problem and makes large-scale product distribution to the countryside tricky. Even though the country has the largest density of retail outlets in the world, most of these stores are small and unorganised.

Nevertheless, retail standards are growing as more formal malls are built. “Malls are going up in all the big cities, but in smaller towns regular corner family-owned stores are still the order of the day and informal markets are also prevalent,” says Lotter. She says she was amazed at the opulence of the malls and hotels. “They are beautiful and first-world standard.”

The US Commercial guide warns that marketers should be wary of thinking India’s growing middle class wants the same products as middle class markets in the Western world. “Even among the affluent middle class, much of their money is spent on need-based consumption rather than on luxury goods,” the guide says, adding that marketers should never underestimate the capability and competitiveness of the local competition.

The guide recommends English as the favoured language for labelling products. John Cunningham, director of Sevens furniture group, who attended a roadshow in Delhi last year, found English usage commonplace. “Everyone spoke English and when they found out I

was from South Africa, they just wanted to discuss cricket, cricket and more cricket,” he recalls.

Reaching the marketCunningham and Lotter both noticed the proliferation of advertising in India. “There’s loads of advertising, ranging from excellent to very poor, and it tends to be less subtle than in South Africa. All the major brands are available,” Lotter says.

Many of the global advertising agencies have offices in the country, including JWT, Leo Burnett, McCann-Erickson, WPP and Lowe & Partners. They feed into the sophisticated and extensive radio and TV network that has more than 700 television channels. While public television reaches around 400-million viewers, there is also a large and increasing number of private television stations.

When it comes to newspapers, a BBC Country Report notes: “India’s press is lively. Driven by a growing middle class, newspaper circulation has risen and new titles compete with established dailies.”

A Deloitte report entitled ‘Technology, Media & Telecommunications India: Predictions 2014’ finds that the average penetration of newspapers is low – about 15% – although it is as much as 70% in urban areas. According to the

2011 census literacy is around 73% and expected to improve, which means there is huge potential for newspapers to expand their readership, particularly in vernacular languages, Deloitte says.

At the same time, Internet use is growing. Digital advertising grew in revenue by 41% in 2012 compared to 7,3% growth in the print industry. “It is expected to grow further on the back of a rising Internet user base in India, which is slated to become world’s second largest by June 2014 with 243-million users,” Deloitte says.

Social media site Facebook is hugely popular, with 71-million monthly active users in India at the end of 2012, an increase of 54% year-on-year. Twitter is also growing in popularity, while smartphone use is surging ahead.

As parting advice, marketers should never forget that India is cricket-mad, says Deloitte, and anything related to the sport is sure to be a winner.

*Not her real name as she is not authorised to speak to the media

India’s enormous population of 1,2-billion and free-market economy presents many potential business opportunities

India’s top hotels are on par with the best in the world

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Since the recession, demand for used and value cars, such as Kia, continues to grow while mid-market brands struggle

The Great Recession forced consumers in many countries to drastically rethink their purchase behaviours and, even though many have regained their financial footing in the years since the downturn officially ended, those buying patterns have remained. By Steve Carlotti

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As A result, of these new consumer purchasing behaviours, more products are moving

towards either the ‘value’ or ‘premium’ ends of the spectrum, leaving a middle market that is struggling to remain relevant. Companies therefore need to reset their innovation efforts and think differently about scale in order to thrive in the new global economy.

the economic downturn that began in December 2007 has, in many economies, had a more permanent impact on consumer purchase behaviour than companies expected.

that fundamental change in behaviour – coupled with a ‘hollowing out’ of the market as more value and premium products become available – has resulted in the greatest challenge to the established market order in the last several decades.

Despite common beliefs, income distribution is not necessarily responsible for this change. More important is the increasing gap between disposable income and available income. for example, an increasing proportion of income is dedicated to connectivity (cellphones, video and data) – expenses consumers typically don’t consider discretionary, particularly for recurring subscription-based services.

looking at purchase behaviour, most of the time consumers choose from a small number of products or services – whether it’s the cereal they buy, the bank they use or the television channels they watch. the dramatic change in circumstances caused by the Great recession has forced consumers to reconsider their choices in category after category. for many, the new choice stuck.

During the recession, consumers realised lower-priced products frequently performed better than expected, leading in turn to more loyalty to these offerings. for example, if consumers believed private label products performed worse than branded goods, but were prompted to try them by a change in circumstance, a better-than-expected experience means they will be more likely to continue to buy the lower-priced product, even when their income constraint loosens. this is a reflection of the value perceived by customers. It stands to

reason that consumers will continue to try lower-price products long after the income effects of the Great recession have passed. this change in consumer behaviour has profound implications for the future strategies of companies.

Be good, but not too goodAs consumer purchasing behaviour has changed, the price band of most goods and services has expanded dramatically. Companies have hollowed out offers for consumers not by making products and services in the middle less compelling, but by dramatically broadening the offerings available at the upper and lower ends of the market. of 100 products competing in the average grocery category in the us, many more are now either ‘premium’ or ‘value’ than was the case a mere 15 years ago. In many categories, mainstream products have gone through a difficult evolution and they

are now competing on a ‘value plateau’. while mainstream products may

perform better than value products, the difference in performance created by a particular benefit (say, the freshness of beer or convenience in banking) is not creating sufficient differentiated value to support the cost differential. Instead, it is adding material amounts of cost.

what results is a preference, among many consumers, for the value offering – not necessarily because it is better and not only because it is less expensive, but because its price is more in line with its benefits than is the case with the mainstream product. this can be true even if the mainstream product improves its absolute performance advantage. take the automobile industry, for example. over the last few years since the recession, demand for used and value cars, such as Kia, continues to grow while middle of the market brands struggle.

At the same time, premium car sales remain strong. In fact, we’re seeing the emergence of more and more premium products across industries. Just look at the grocery industry. whole foods (a us, Canadian and uK supermarket chain specialising in natural and organic foods) plans to expand from fewer than 400 us stores to 1 200 (with more than 100 new stores currently in development), which will make high-

The recession caused a fundamental change in consumer

behaviour

Why the ‘disappearing middle’ is a real market threat

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end and organic products more readily available in smaller cities nationwide. And in retail, neiman Marcus (an American luxury specialty department store) is doing quite well compared to the retailers that have been a bastion

of the middle for a long time.Premium products, in most

categories, have simply moved to the next upward sloping part of the curve. this framework for explaining the rise of premium and value challenges the innovation process of most established brands. Incremental innovation is no longer sufficient, given how value is being perceived by consumers in most categories. there’s no more room for improvement when offerings are already over-improved, creating a need for an ‘innovation reset’.

The innovation resetthe most important strategic question for your company is how the benefits you are offering compare to the next alternative, as well as the cost differential involved. If the cost differential is larger than the value differential, you are in great danger of being attacked from below.

One of the implications of the benefit/

segment of people, who are willing to pay a lot for it, is far more likely to be successful in today’s global, digitally-connected business environment.

As a result, aiming for the ‘middle of the market’ is no longer necessary to drive business success. for large companies, the advantage of scale will no longer come from applying it just to the supply side of the business, but also the demand side. with scale comes the ability to generate superior consumer understanding, something most companies spend relatively little to understand.

large companies must also learn to fail quickly; to create larger successes, they must embrace bigger failures. when you are part of a large enterprise, you are expected to leverage your scale when you think about innovation. But it would be far better for large companies to free themselves consciously of these constraints, as they get in the way of innovating to grow the company.

over the last several decades, a quiet revolution has occurred. the combination of changing business economics toward lower scale, increased availability of consumer insight and the after-effects of the Great recession have created an environment like nothing we have experienced in our lifetimes. Businesses have been created – and will continue to be created –at the top and the bottom of most categories. the critical question is whether established players will figure out how to adequately respond to this new environment.

Steve Carlotti is CEO of The Cambridge Group, a Chicago-based growth strategy consulting firm that is part of the global Nielsen research group. Article first published 2014. Reproduced with permission from Knowledge@Wharton (http://knowledge.wharton.upenn.edu). © 2014. The Trustees of the University of Pennsylvania. All rights reserved.

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Smaller offerings are now more economically

viable

price curves is that benefits can be more readily increased by exploring new benefit territories. The iPhone is a wonderful device, but it is not necessarily a superior telephone (or email device). what our experience with the iPhone demonstrates is that new benefit areas for the phone (apps and a sleek design) were far more important than the phone makers of 14 years ago gave them credit for being. this lesson is vital in all major categories. Breakout may be more easily found by creating new benefit territories than continuing to innovate incrementally on historical benefit territories – a profound change from the way many companies spend the majority of their innovation dollars today.

Think differently about scalehistorically, we have thought about the benefits of scale as being cost or supply based – with more scale comes the ability to offer the same set of benefits at lower cost. But this is no longer the case. Indeed, in category after category, technology and the globalisation of production has made smaller offerings more economically viable. An offering that is tailored to appeal to a small

While the iPhone is not necessarily a superior phone, it achieved enormous popularity by exploring new ‘benefit territories’ such as apps and a sleek design

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Google takes a bite out of Apple

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Trends, markets, happenings and musings – in the spotlight and under scrutiny

Marketing history is full of weird and wonderful brand collaborations, with one of the more uncommon of late being the exclusive Italian fashion house of Dolce & Gabbana’s decision to team up with Magnum, the international ice-cream brand owned by FMCG giant Unilever.

They’re an odd couple, To say the least. dolce & Gabbana is cutting edge and happening, with

founders that take delight in flaunting their wealth and success, happily posing for smouldering, artistic, barefoot photographs. It’s hard to imagine the ceo of unilever – the anglo-dutch multinational with a staff of more than 170 000 and some of the world’s leading consumer brands in its stable – posing without a jacket, let alone his shoes.

nevertheless, the odd couple of the corporate giant and the fashionista are, figuratively at least, in bed together. The occasion is the 25th anniversary of unilever’s Magnum ice-cream brand, which started out in denmark before going global. The collaboration with the Milan-based fashion brand involved the launch of a limited edition (northern hemisphere) summer ice-cream bar called the pistachio White dolce & Gabbana Magnum.

It is made with vanilla ice cream, pistachio bits, chocolate chips and a white chocolate shell. The bar comes in a colourful decorative box inspired by the images of sicily, with Zagara orange blossoms, prickly pear plants and bright coral fruits to evoke summer. sicily,

The luxury fashion house and the ice-cream brand

the island off the Italian mainland best known for its connections to the Mafia, is the birthplace of stefano Gabbana, co-founder of the fashion house.

“Want to invest in one of the hottest summer trends from dolce & Gabbana without ponying up thousands of dollars?” the slightly perplexed New York Post newspaper asked its readers when it announced the unusual brand collaboration recently.

However, this isn’t the first time that Magnum has made headlines by teaming up with strange partners for marketing purposes. last year it collaborated with Zac posen, the american fashion designer and reality TV star, to create a us$1,5-million 24-carat gold dress for the launch of the Magnum Gold ice cream range.

Magnum and Karl Lagerfeldprior to that, it partnered with paris-based fashion designer Karl lagerfeld, who directed a TV commercial for the brand starring american TV actress and model rachel Bilson. “It’s a toss-up what’s more bizarre – lagerfeld doing ice-cream commercials or seeing a model having dessert,” observed the marketing industry publication Adweek.

But if you think the above are strange bedfellows, an even ‘odder couple’ moment came in 2004, when the sexy lingerie brand Victoria’s secret used singer Bob dylan in a 30-second TV commercial. dylan was a 1960s counter-culture musician well-known for his surly, downbeat lyrics that lamented the spread of consumerism and commercialism, as well as being a leading figure in the Vietnam War protest movement.

he therefore seemed an unlikely collaborator for a highly commercial and upmarket female brand. “While dylan’s presence in the commercial could be explained by a desire for money or exposure – it’s hard work for old-timers to get noticed – it remains a mystery as to why Victoria’s secret asked dylan for an appearance in the first place,” observed the South African-based creative publication One Small Seed. “Marketing is a complex niche of the entertainment industry, but the idea of Bob dylan-endorsed lingerie doesn’t quite seem to ring the bell of profiting bliss.”

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